Zambia Sugar records 13% growth despite reduced exports

BUUMBA CHIMBULU writes@SunZambianZAMBIA Sugar Plc has reported a 13 percent growth in revenue to K3.334 billion for the year ended August 31, 2020.This was largely driven by 15 per cent growth in domestic sales volume and a higher realisation of export sales due to a 15 per cent depreciation of the Kwacha against the United States (US) dollar over the year.This is according to the abridged financial results for the year ended August 31, 2020 posted on the Lusaka Securities Exchange (LuSE).“The total revenue for the year ended August 31, 2020 was K3.334 billion, 13 per cent above the prior year comparative,” Zambia Sugar company secretary Raphael Chipoma said.In an order of the board, Mr Chipoma explained that this was however partially offset by a 27 per cent reduction in export sales volumes.He said operating profit for the year was K775 million compared to K606 million posted the previous year.“This profit increase was mainly driven by higher net revenue and sustained production levels. After tax profits, however declined from K269 million to K235million due to higher effective tax rate resulting from a change in the business profile,” Mr Chipoma said.He noted that the escalation of costs remains a major challenge in the business with increases during the period of electricity tariffs by 56 per cent and fuel prices, compounded by higher than expected inflation at 15.5 per cent.Mr Chipoma said the depreciation of the Kwacha also adversely affected direct costs in the factory and sugarcane operations which have significant currency exposure.“Extensive periods of electricity load shedding hindered the smooth operation of the production facilities and also adversely affected the ability to fully irrigate the crop as required,” he added.Mr Chipoma said the effects of COVID-19 pandemic further exacerbated an already challenging business operating environment.He said the company faced significant disruptions to the supply chain particularly relating to spares, chemicals and other imported inputs.“Significant costs were also incurred on the estate as well as the surrounding community to mitigate the potential effects of an infection outbreak.“However proactive cost control measures and business improvement projects have helped to ensure efficient operations, increased productivity and cost containment while still focusing on customer service,” Mr Chipoma said.He said the domestic market performance had continued on a positive trajectory as a result of continued optimisation of marketing strategies and the benefit of reduced illicit sugar flows into the market during lockdown.The market performed 15 per cent above the actual volumes for the previous year ended August 2019.Mr Chipoma said regional market sales volumes have reduced due to the impact of surplus world sugar supply resulting in significant volumes of world market sugar finding its way into the region affecting demand and putting pressure on margins in the first half of the period.He said sugar production for April 2020 to March 2021 season was expected to be slightly lower than the April 2019 to March 2020 season as per the current seasonal estimations. The Sun