Zambia Sugar Plc has posted increased profits of nearly K270 million during its financial year period ending August 31, 2019, boosted mainly by improved domestic sales volumes of around seven per cent.
But the company says that heightened load-shedding could negatively affect a steady supply of cane in next year’s agricultural season.
According to Zambia Sugar’s summarized consolidated statement of comprehensive income for its financial year period ending August 31, the company posted increased profit margins of K269,394,000, up from K156,394,000 during the corresponding period last year, mainly triggered by improved domestic sales volumes of seven per cent.
The company’s gross revenues also peaked at nearly K3 billion, up from around K2.4 billion during the corresponding period last year.
“The financial results for the year ended August 31, 2019, show a marked improvement year on year. Despite challenging economic conditions, the company made positive strides towards improving the financial position. The business continues to improve its route to consumer and product offering to the market, including the introduction of small affordable pack sizes, which had a positive impact on the financials. In light of these commercial initiatives, domestic sales volumes grew by seven per cent to 182,000 tonnes in a difficult economic environment,” Zambia Sugar stated.
“The improvement in technical performance and sales volumes translated into a positive financial performance in the year under review. Revenue increased by 25 per cent to K2.96 billion (2018: K2.36 billion) and operating profit improved by 56 per cent to K606 million (2018: K388 million), while earnings per share improved by 73 per cent to 83.3 ngwee per share. Management continues to focus on driving cost control, and improving efficiencies to increase profitability and delivering shareholder returns.”
But Zambia Sugar stated that heightened load-shedding, largely experienced in the second half of this year, could take its toll on slashing cane supply next year.
Cane supply this year increased by 15 per cent to 3.35 million tonnes, according to company data.
“The implementation of various agricultural and continuous improvement practices have had a positive impact on cane yields. We expect to end the season on a positive note, although the impact of load shedding will be detrimental to cane supply in the 2020 season. The challenging economic conditions in the country driven by drought, high inflationary pressure, increasing interest rates and a weak local currency are expected to impact the domestic market. Management will continue to drive the implementation of the commercial strategy to increase market penetration and grow market share,” stated Zambia Sugar.
In view of the company’s improved financial performance, a final dividend of 8 ngwee per share has been proposed by the Board for approval at the forthcoming Annual General Meeting.