STARAFRICACorporation Limited (SaCL) has posted a $133,47 million loss in the first half of the financial year to September 30, 2022 owing to increases in raw sugar prices and operating costs in real terms.
The depreciation of the Zimbabwe dollar to $676,22, against the greenback, from $142,42 at the beginning of the half-year period under review drove the firm’s raw sugar prices and operating costs.
The firm reported profit after tax of $182,5 million in the comparative 2021 period.
“40% increase in turnover was recorded in the period under review, from $14,92 billion to $20,90 billion. The escalation was largely attributable to strong demand for all the group’s products during the period under review,” chairperson Rungamo Mbire said in the statement attached to the financial report.
“However, the group’s operating profit receded by 4%, from $1,41 billion in the prior year comparative period to $1,35 billion for the six months ended September 30, 2022. The lower operating profit was a direct result of increases in raw sugar prices and operating costs in real terms.”
He said increasing global inflationary pressures had resulted in a spike in costs of imported chemicals, packaging and refinery spares.
Looking at its segments, SaCL saw its Goldstar Sugars volumes of granulated sugar increase by 5%, from 39 294 tonnes produced in the prior comparative period to 41 155 tonnes.
The firm said this was a result of high sugar demand.
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Regarding its sugar speciality manufacturing and marketing subsidiary, Country Choice Foods, sales volumes increased by 28%, from prior period’s 919 tonnes to 1 176 tonnes.
“The growth in sales volumes have been supported by an improvement in the production of the sugar specialy unit, from 901 tonnes in the prior comparative period to 1 229 tonnes in the period under review,” Mbire said.
SaCL’s property business recorded $100,19 million in rental income that helped in boosting this segment, compared to $47,8 million last year.
It also earned $131,16 million from its associate, Tongaat Hulett Botswana, after converting the forex earnings to Zimbabwe dollars.
“The half-year period under review was characterised by rising inflationary pressures and exchange rate volatility, combined with heightened economic uncertainty emanating from the Russia-Ukraine conflict. This continues to undermine economic recovery from the challenges associated with the COVID-19 pandemic in the prior year comparative period,” Mbire said.
Total assets saw only a marginal improvement to $15,4 billion, owing to a revaluation of property, from a 2021 comparative of $14,7 billion.
Despite its loss, SaCL ended the period in a liquid position with $1,51 to every dollar of debt.
Mbire said the firm was looking to government to reinstate duty on imported sugar which will support local sales.
“The company will continue to tighten its cost-mitigation measures in an effort to improve the operating profitability of both the refinery and the sugar speciality unit,” he said.
SaCL expects Zimbabwe’s operating environment to remain challenging owing to inflationary pressures.
