Starafricacorporation hails duty on sugar

Sugar processor Starafricacorporation says the anticipated reinstatement of duty on imported sugar will have a positive impact on the local sugar industry as the development will reduce pressure from imports.

Industry players have long raised concern that the influx of cheap sugar imports after the lifting of duty on products such as sugar by the Government is threatening the viability of more than 1 300 commercial out grower farmers.

Starafricacorporation chairman Dr Rungano Mbire noted in the financial results for the year ended March 31, 2023 that in the period under review, sales volumes of granulated sugar produced by Goldstar Sugars (GSS) were stagnant, having been 82,500 tonnes sold in the prior year to 82,321 tonnes.

This, he said, was on the back of pressure from imports after promulgation of Statutory Instrument 98 of 2022.

“The Ministry of Finance and Economic Development later suspended duty on the importation of sugar into the country. However, production was adversely affected by raw sugar stock outs and power outages.

“This resulted in production volumes reducing by six percent, from 82,399 tonnes in the prior year to 77,270 tonnes during the year under review.

“GSS continues to focus on refurbishment and replacement of critical items of plant and machinery to improve plant availability and, therefore, the refinery’s throughput in terms of both quantity and quality of granulated white sugar,” reads part of the financials.

However, Dr Mbire said “The Group looks forward to Government reinstating duty on imported sugar, a development which will impact positively on the local sugar industry.”

Dr Mbire said with the local unit regaining value after a steep depreciation in June 2023 and tight monetary and fiscal policies enacted in May, if maintained, are expected to bring more stability to the market.

He said the group will continue to tighten its cost-mitigation measures in an effort to improve the operating profitability of both the refinery and the sugar specialties unit.

In the period under review, a 30 percent increase in turnover was recorded from $38,5 billion in the prior year to $50,1 billion.

The improvement was largely attributable to strong demand for all of the Group’s products during the year under review.

However, the Group’s operating profit shrunk by 93 percent, from $5,0 billion in the prior year to $0,4 billion.

Dr Mbire said the lower operating profit was a direct result of increases in raw sugar prices and operating costs in real terms. Increasing global inflationary pressures have resulted in a spike in the costs of imported chemicals, packaging and refinery spares.

In historical terms, revenue increased by 317 percent from $10,2 billion recorded in the prior year to $42,5 billion, while operating profit increased by 34 percent, from $1,7 billion to $2,3 billion.

On properties business, in inflation adjusted terms, revenue performance for this business improved significantly with $337,5 million of rental income being recorded, compared with $162,2 million in the prior year.

The unit has recovered significantly from prior year, which was negatively impacted by the Covid-19 pandemic that reduced tenants’ ability to generate income and meet their rental obligations. Following the waning of the pandemic, Dr Mbire said occupancy rates and, consequently, rental collections have increased across the property portfolio.-chronicle