SUGAR company, Triangle Limited, will undertake a phased retrenchment programme with the first group leaving at the end of next month amid a tough operating environment, the company said yesterday.
In a statement, Triangle said the phased approach, which allowed it to manage the transition with the utmost sensitivity and care, will be completed by the end of August this year.
While the company did not give the number of the employees to be affected, it said escalating operational costs, particularly in areas such as fertiliser, fuel, maintenance costs and imported goods and services, combined with inflationary pressures and currency losses, had severely impacted its ability to sustain operations.
“The inability to claim VAT [valued added tax] on inputs after sugar was exempted from VAT and competition from low-cost duty-free imported sugar, have severely impacted our ability to sustain current levels of operation,” the company said.
“Since 2022 we have seen profit margins decline significantly by 55%, manpower costs increasing by 133% as a proportion of revenue and debt levels rising to unsustainable levels.
“The company has been unable to generate positive cash flows from its operating activities for the past three years and has faced a very constrained working capital position since the implementation of the revised cane supply arrangements, which has necessitated constant trade-off between what the business needs and what it can afford.”
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Triangle said the financial realities underscored an urgent need for corrective action for the business to generate sufficient cash flows to reduce debt and reinvest in its future.
While the company said it had managed to address the declining trend in sugar production, the cost of producing sugar remained significantly higher than regional benchmarks.
Triangle said ongoing discussions with stakeholders regarding the division of proceeds among farmers and millers, as well as continued pressure for adjustments to wage agreements may further strain its financial outlook.
“Despite implementing numerous cost-reduction and revenue-enhancement initiatives, these efforts have proven insufficient to stabilise the business. This decision has been taken to protect the long-term sustainability of our organisation and ensure that Triangle Limited continues to play its vital role in Zimbabwe’s economy and the livelihoods of communities in the Lowveld region,” Triangle said.
The firm said the decision to retrench employees is entirely based on local economic and operational challenges and not related to the business rescue process of the company’s shareholder in South Africa or the acquisition of the business by the Vision Consortium.