Business

starafrica seeks to double profits

Mr Mutizwa

Enacy Mapakame Business Reporter

Despite Covid-19-related challenges experienced by businesses this year, sugar processor, starafrica corporation, says it will focus on doubling export volumes over the next six months and beyond.

Group chairman Mr Joe Mutizwa indicated the group was on a phased refurbishment of its secondary plant and outstanding work was expected to be completed by end of this financial year to enable the company to meet forecast local and export demand.

“For the ensuing six months and beyond, the company will focus on growing its exports market in the region and expects to double volumes achieved in the period under review,” said Mr Mutizwa in a statement accompanying the group’s financial results for the half year to September 30, 2020.

During the half year period, turnover rose 24 percent to $1 875 billion from $1 508 billion realised in the prior year comparative period as the company continued developing sugar export                     markets.

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Although starafrica operated during the lockdown period, as an essential service provider, the company was not spared from Covid-19 induced challenges that affected businesses across sectors such as reduced production time.

Additionally, the destruction of the group’s raw sugar warehouse by fire in the sugar refining plant resulted in the company losing a month’s production.

Resultantly, production at Goldstar Sugars Harare (GSSH) was disturbed while other factors such as Covid-19 related challenges, maintenance shutdown in August and transport restrictions added to the woes.

As such, sales volumes went down 11 percent to 26 959 tonnes from 30 469 tonnes recorded in the same period last year.

Currently, the upgrade of the damaged warehouse is underway and scheduled to complete in six months.

At Country Choice Foods, volumes went down by 11 percent due to low disposable incomes and depressed business activity experienced by this operational unit’s major industrial customers. Its products however, continued to dominate the market.

Associate TongaatHulett Botswana also continued to be a major player in the sugar industry in Botswana and recorded an after tax profit of $99,95 million of which Star Africa’s share was $33,32 million after converting the earnings into local currency at the Reserve Bank of Zimbabwe (RBZ) auction exchange rate prevailing on September 30, 2020.

The properties business recorded a 53 percent increase in turnover to $8,2 million from $5,3 million recorded in the prior half year on improved occupancy.

Overall, the group recorded Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) increased by 34 percent to $318 million relative to $238 million that was achieved last year as a result of cost containment measures implemented.

Profit before tax went down 68 percent to $70 million from $248 recorded in the prior year comparative period.

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Loss for the period came in at $53 million from a profit position of $153 million.

Despite the challenges experienced, Mr Mutizwa said the group is upbeat of catching up with the lost production and achieve its set production levels and sales target by end of the financial year.

The stability in the foreign currency exchange rate is expected to remain, which in turn should have a positive impact on prices of goods and services while the company also looks at growing exports.

HERALD