Chronicle Editor
Senior Business Reporter
SUGAR processor Starafricacorporation Limited is optimistic of continued sound financial footing underpinned by economic reforms being implemented by the Government.
In its unaudited interim abridged financial results for the half year ended September 30, 2019, Starafricacorporation chairman Mr Joseph Mutizwa said increasing exports remains their biggest desire.
“Notwithstanding the short to medium term forecast of a challenging trading environment, we believe that strategies being pursued, coupled with the eventual cessation of current austerity measures will see the company remain on a sound financial footing,” he said.
“The major growth strategy for the company hinges on export markets that include existing Southern Africa markets and Central and East African markets into which the company has just begun to make inroads.”
Mr Mutizwa added that prospects of a better 2019/2020 farming season are expected to ease pressure on Government for food imports and will also ease other local cost pressures. The company’s turnover for the period under review amounted to ZWL$132,1 million compared with ZWL$28 million recorded in prior year comparative period.
The increase was on the back of changes in the product mix as well as the necessary inflation related price adjustments aimed at preserving the company’s ability to service the market.
Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) went up to ZWL$19,4 million in comparison with ZWL$2,1 million that was achieved in the comparative period last year due to a combination of the increase in turnover and cost management measures, which restrained growth in costs to below the growth in turnover.
Mr Mutizwa said their Goldstar Sugars Harare (GSH) unit continues to anchor the group in terms of turnover and profitability in dollar terms.
“It (GSH) produced 32 047 tonnes of refined sugar compared with 35 791 tonnes produced in prior half year.
“The slowdown was due to the acute power shortages experienced in July and August 2019, which resulted in the factory shutting down for five weeks.
“The power situation improved after the establishment of a ring-fenced power supply arrangement, which however came with a steep tariff review,” he said.
The plant, Mr Mutizwa said, remains certified by The Coca Cola Company as well as Food Safety certification under the FSSC 22000 series following review audits, which took place in the period under review. The certifications continue to play a pivotal part in the company’s export-oriented survival strategy. Country Choice Foods (CCF) achieved an EBITDA of ZWL$5 million for the half year under review against ZWL$0,4 million realised in prior comparative period.
Production for the unit was nine percent higher than that achieved in the same period last year and performance was also buoyed by a change in product mix where core products, which have better margins comprised a greater part of the total sales volume for the period when compared with last year. On the scheme of arrangement whose tenure expires in 2022, Mr Mutizwa said the scheme remains in place with 72 percent of creditors having exercised their equity conversion option.
He said focus was on getting the remaining creditors to either convert or agree to a restructured settlement arrangement before expiry of the scheme.
“The group is servicing its interest obligations and is confident that current engagements with creditors will result in initially a reduction and eventually elimination of the interest obligations,” said Mr Mutizwa.
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