Enacy Mapakame, Harare Bureau
SUGAR processor, Starafricacorporation, is upbeat of maintaining a growth trajectory for the remainder of this financial year backed by increased exports into the Southern Africa region and beyond.
This comes as revenues for the third quarter to December 31, 2019, grew 208 percent compared to the same period in the previous year. The growth was driven by price adjustments as well as export sales growth, especially into South Africa, Namibia and Botswana.
Starafrica has also attributed the growth to its deliberate skewing of sales mix towards products with better margins as a way of hedging against inflation.
“The remaining three months to the end of the reporting year are forecast to remain challenging but the company is confident of continuing on a profitable trajectory through widening exports market beyond the Sadc region, stringent cost management as well as modifications to the current usage of the properties portfolio to increase occupancy,” said the sugar processor in a trading update for the quarter.
Starafrica is also pinning its hopes on the current sugarcane plantations expansion taking place in the Lowveld under the Kilimanjaro Project, which will result in increased supply of raw sugar at competitive prices for both local and export requirements.
Last November, President Mnangagwa launched the US$40 million Kilimanjaro Sugar Cane project being developed by Tongaat Hulett Zimbabwe in Chiredzi, which has been dubbed a game changer in sugar cane production.
The project will develop virgin land into sugar cane plantations at Triangle and Hippo Valley estates in Chiredzi as part of the firm’s drive to increase aggregate sugar output while also empowering indigenous out-grower farmers who will be allocated plots on the nearly 3 300 hectares being developed on a cost recovery basis.
During the quarter under review, sales volumes at Goldstar Sugars Harare (GSSH) went up seven percent than prior year comparative period due to improvement in export sales to South Africa, Botswana and Namibia.
At Country Choice Foods (CCF), which is mainly into sugar derivatives, volumes were 35 percent lower than prior year comparative on a slowdown experienced in the confectionery industry as well as the decline in the currency’s purchasing power which led to the market shifting to basics.
The period was characterised by inflationary pressures that saw a significant depreciation in the local currency while consumer spend was also reduced.
By year end, inflation was pegged at above 500 percent while the official exchange rate on the interbank market was at $16,7 against the US$1.
Occupancy levels at the properties unit remained constant as the company sought to balance the need to increase yields through rental adjustments with that of keeping occupancy at reasonable levels.