Lusaka, Zambia – Zambia Sugar Plc has announced a remarkable financial performance for the six-month period ended February 29, 2024.
According to the CEO Oswald Magwenzi, the performance has been achieved by keeping and maintaining the implementation of their strategy. He further indicated at the half year presentation held by the company that their product continues to be “safe and you never have to worry about it harming your family”.
Some of the company’s Key performance metrics included: Cane supply up by 8 %, Sugar production up 14%, Sales growth up by 18%, Revenue up by 39% and Operating profit up 105%.
Hezron Musonda, the company’s CFO who made his debut at the event indicated that the company’s operating profit surged by 105% to K1.34 billion, up from K656 million in the previous year. This significant increase was driven by improved domestic sales volume, despite significant cost pressure on key inputs and the depreciation of the Kwacha.
Total revenue for the period under review increased by 39% to K3.26 billion, up from K2.35 billion in the previous year. This increase was attributed to higher domestic sales volumes and improved export proceeds realization. Domestic sales volumes increased by 33% due to a 14% increase in sugar production.
The company’s cash flow generation improved significantly, resulting in a reduction in gearing from 14% to 11%. This led to a decrease in finance costs from K30.2 million to K4.7 million for the period under review. Profit after tax and headline earnings increased to K1.09 billion, up from K510 million in the previous year. This resulted in an increase in Earnings Per Share (EPS) of 113%, from 161.4 ngwee to 343.5 ngwee per share.
“Although Zambia Sugar’s operating costs increased by K229,000, the company offset this rise through a K196,000 increase in domestic market revenue. This means that the company is not passing all its costs on to consumers. Instead, as CEO Oswald Magwenzi explained, ‘We are absorbing the escalating costs. Our goal is to run a sustainable, low-cost model that enables us to manage our costs effectively and absorb some of the costs without passing them on to consumers.'”
Operational Performance continues to be inspired by the company’s investment (implemented and planned) in technology.
Cane supply for the period under review increased by 8% due to higher cane yields for both own estate and out-growers. This was mainly attributable to better climatic conditions during the summer growing months and availability of power for irrigation. Sugar production increased by 21,091 tonnes to 170,067 tonnes, a 14% increase compared to the same period last year.
However, the company still faces some major headwinds. According to the CEO, Challenges for Zambia Sugar include: Currency volatility, Drought, Electricity load management, Inflation and Illegal sugar trading.
Overall, Zambia Sugar Plc’s financial performance for H1 2024 is a testament to the company’s resilience and ability to adapt to challenging market conditions. The company’s focus on improving domestic sales volumes, reducing costs, and investing in operational efficiency has paid off, and shareholders can expect continued growth and profitability in the future.
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