The financial results for the year ended 31 August 2019 show a marked improvement year on year for Zambia Sugar Plc. Despite facing several economic challenging conditions, the company made positive strides towards improving the financial position. The operational performance for the financial year showed an improvement compared to the previous financial years. Sugarcane supply increased by 15% representing 3,356,000 tons, and resultant sugar production increased to 399,000 tons, from 351,000 tons in the previous year.
The continuous improvement initiatives in the agriculture operations have played an important role in increasing sugar cane yields thereby increasing overall cane supply and reducing cost. These initiatives continue to be rolled out to a wider area in order to further grow the cane supply to satisfy factory capacity.
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 7% representing 182,000 tons in a difficult economic environment.
The improvement in technical performance and sales volumes translated into a positive financial performance in the year under review. Revenue increased by 25% representing K2.96 billion (2018: K2.36 billion) and operating profit improved by 56% representing K606 million (2018: K388 million) while earnings per share improved by 73% representing 83.3 ngwee per share. “The performance for the financial year ended 31 August 2019 has been driven by increased cane supply and sugar production, strong regional market demand and improved export revenue realization due to the depreciation of the Zambian Kwacha,” highlighted in their Trading statement on SENS.
The company remains heavily indebted, with total debt of K1.6 billion. All debt commitments were met during the year and the external syndicated loan repayments of K140 million were made. This external loan will be repaid in full by July 2020, whilst intercompany loans are scheduled for repayment by 2023. The company endeavors to improve cash flow and pay down long term debt as a key strategic imperative. Management will continue to focus on maximizing production, lowering the cost base and reducing debt levels within the business.
Stock Performance
In the past 5 years, the LuSE’s All-Share index outperformed the Zambia Sugar security. However, a turn in fortune was evident towards the tail of November 2019 where the security is seen to almost closing the year at par of the All-Share index. With the index losing ground in the last half of 2019, Zambia Sugar’s stock currently valued at K2.50 has stably maintained its performance in comparison to the all-share index.
For now, the shareholders look forward to the annual general meeting that is scheduled for Radisson Blu Hotel, Lusaka, Zambia on Thursday, 28 November 2019 at 14:00hrs where a final dividend of 8 ngwee per share will be proposed by the board.