Zambia Sugar Plc is the largest single mill cane sugar producer in Africa it was established in 1964. It is a subsidiary of its parent company Illovo Sugar Africa, it is listed on the Lusaka Securities Exchange with 75% of its Shares held by the Illovo Sugar Africa Group and the balance by institutional and private investors. As the country’s leading sugar producer its primary focus is on the domestic market, producing a wide range of sugar and sugar products under its Whitespoon brand.
The Covid 19 pandemic affected many sectors of the economy as well as many companies’ which was also the case with Zambia Sugar as their Global supply chain was disrupted this brought along the initiative to transfer skills remotely. The environment of weak demand led companies to scale back employment and procurement activities. Despite input prices escalating, output prices have generally been lower as part of efforts to encourage sales. This impacted the volume of sugar sold both in domestic and regional markets. Zambia Sugar has been working closing with Government to mitigate COVID.
In their economic working environment Rebecca Katowa the country’s Managing Director for Zambia Sugar mentioned in her report that the currency Keeps impacting the cost of inputs, as they are a heavy importer of fertilizers, Chemicals, machinery as well as spares. Cost Inflation on the business has also been a challenge and the reduction in disposable income of its consumers has been a challenging factor as well. The dramatic increase in costs which decreased the gains from higher sales.
In 2021 Financial year there was a 52% increase in revenue which moved the needle significantly, from last year with K32,113, 000 to K579,377,000 this year. This was attributed by a number of factors such as the value of the crop, with a good agricultural practice you have a good yield.
Raphael Chipoma the Finance head of Zambia Sugar in his report said the main contributing factor to the increase in revenue is the Exchange rate, as Zambia Sugar is a Key exporter and with the Africa Free Trade Agreement they have the opportunity to export sugar to countries such as Rwanda, Kenya, Democratic Republic of Congo as well as other countries. The world price of Sugar is based on it Demand and Supply and surplus Sugar is traded on the world Market. With the depression of the Kwacha they still managed to get the same Kwacha Value but make a significant increase in the revenue due to the foreign currency they brought in.
Another factor was the reduction in finance cost which was 61 million lower than last year, as well as repaying their debts increased revenue. Their focus now is to pay less of financial costs and focus more on investment and paying out dividends to Shareholders. Domestic Volume growth as well as increased prices which was an attribute of the increase in equities due to reduction in debts which has increased Shareholder Funds.