Zambia Sugar Plc delivers a record performance for the financial year ended 2021
Agriculture, Zambia Sugar Plc

Lusaka Securities and Exchange listed sugar processing company, Zambia Sugar Plc, has advised shareholders that has recorded a record performance for the financial year ended 2021.

 

The Company has recorded a number of achievements including winning Illovo Group Awards for the Best Factory Performance at the Nakambala Factory, Best Safety award, Best Financial Management award and Best Country Performance award for the year 2020/2021. All these have culminated into the financial results the Company announced on Wednesday 3rd November 2021.

 

The Company recorded revenue for the year ended 31 August 2021 of K4.989 billion, an impressive 50% above the prior year. The Company explained that this was driven by 26% growth in domestic sales volume and a higher realisation of export sales due to a 25% depreciation of the kwacha against the US dollar over the year. This was achieved despite an 11% reduction in export sales volumes as a result of a shift in mix allocating it to domestic sales.

 

Amid the COVID pandemic the Company recorded an operating profit for the year of K1.615 billion compared to K775 million achieved in the previous year.

According to a statement from the Company, it explained that the profit increase was mainly driven by higher net revenues, sustained production levels from both the factory and the cane fields and culmination of cost saving measures undertaken in the past years.

The resultant after tax profit increased from K235 million in 2020 to K1.086 billion for the financial year.

Furthermore, the Company acknowledged that the year came with strong economic head winds and this was reflected in high cost escalation which was a key challenge for the business. The Company faced cost increases during the year largely driven by the currency depreciation, high inflation and supply chain disruptions due to COVID 19 effects.

 

Production costs rose by 28% compared to 2020. However, the Company implemented measures to mitigate some of these cost escalations including the embedding of a new operating model meant to make the business more agile and resilient.

 

The Company further emphasised that the strong operational performance and focused working capital management led to strong cash generation which it applied to significantly reduce the borrowings from K1.1 billion at the beginning of the year to K403 million at 31 August 2021. This reduction in borrowings has helped significantly reduce the gearing of the business from 40% to 9% and a related lowering of the interest cost.

 

Rebecca Katowa, former Country Managing Director who retired on 31 August 2021 will certainly be pleased with this performance along with all the Company’s shareholders whose share earnings grew for the year to 343 ngwee compared to 74 ngwee the previous year. The Company’s Board would be proposing a dividend of 84.5 ngwee per share at the Company’s Annual General Meeting which is scheduled for 24 November 2021.

 

The Company’s new Managing Director Oswald Magwenzi, who paid a glowing tribute to Rebecca at a Company farewell reception recently, is under no illusion that he will have to build on her successes taking the Company to a consistent level of performance. Minister of Finance and National Planning Dr Situmbeko Musokotwane gave an example of Zambia Sugar Plc’s Nakambala Estate as an estate that is run well and should be used as a model for other agricultural estates that can churn out various other agricultural produce.

 

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