By Wahard Betha
Sugar group Illovo Malawi says it is optimistic that better weather and a return to normal power generation by Electricity Generation Company (Egenco) will improve the output from its agricultural operations, which will positively impact production efficiency and factory throughout.
In its audited financial statements for the year ended August 31, 2022 signed by Group’s Chairman Gavin Dagleish and MD Lekani Katandula, Illovo says it will continue pumping in more efforts to improve the performance of the group while providing the ultimate consumers with affordable prices.
It says: “More efforts on drip irrigation and other elements of the agricultural recovery plan replete with excellent agronomic practices, continued grower support, a proactive approach at plant maintenance and efficient production initiatives and embedding of the overall performance improvement initiatives throughout the entire business value chain should result in even further growth in the group results.
“The group will continue pursuing various initiatives in commercial and logistical operations that are expected to contribute to better delivery of excellent quality product pack sizes at affordable prices to the ultimate consumers.”
“Efforts at growth will also be engaged further in the export markets to assist us counter the impact on the business of the scarcity of foreign exchange and further ensure maximization of value from every ton of sugar sold.”
Dagleish and Katandula, however, say that delivery of cost optimization efforts for the business continues to suffer from depreciating exchange rates for the Malawi kwacha against major trading currencies.
They also bemoan increasing inflation and interest rates, and the scarcity of foreign currency and fuel.
“The Group will therefore continue to actively engage significant efforts at cost reduction, improvement of operational efficiency, export revenue enhancement, and domestic market growth to drive delivery of good results for the business and all stakeholders into the foreseeable future,” Reads the statement.
However, despite the challenges, the Group experienced significant growth in domestic market and sold 213 550 tonnes from 175 578 tonnes in the prior period.
The Group achieved 14% growth turnover to K186.6 billion, 24% growth in operating cost profit to K39.5 billion and 31% growth in profit before tax to K38.4 billion over the prior year.
Illovo Group also contributed to the Malawi fiscus by paying and collecting tax on behalf of government amounting to K28.2 billion and managed to fully repay its debt and achieve a net cash position in the year despite the challenges it faced.
However, Cyclones Ana and Gombe that the country experienced in the first quarter of the year 2022, impacted on the delay by the Group to commence cane crushing exercise for the 2022 season by weeks as the wet fields could not be accessed for cane harvesting and haulage.
Dagleish and Katandula state: “The persistent rainfall negatively impacted cane quality and sucrose recoveries and high ash content which caused plant mechanical problems resulting in high incidences of downtime.”
“The two factories planned to start production mid-April 2022 but could not successfully achieve this due to muddy cane, especially at Nchalo and general plant downtime.”
“Both factories eventually started production initially at low throughout rates particularly in the first week of May 2022 while factor throughout was affected by plant mechanical problems resulting from the poor quality of the cane.”
Within the year, domestic revenue for the Group continued to register growth despite the reduced inventory levels in the period from late March to mid-May 2022 resulting from the delayed crushing cane.
“The Group commits to continue contributing to the development of the country through significant employment, trade opportunities, tax contributions, and various statutory payments,” reads the statement.