Fair value losses, operational impediments at the centre as Star Africa’s total profit tumbles 41% in FY21

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Key Highlights

  • PAT at ZWL109.7 million, down 41% from prior year
  • The Group incurred a monetary loss of ZWL163 million
  • Revenue increased by 23% to ZWL5.08 billion
  • The Group is on a renewed drive to re-tool its operations and attend to plant downtime

HARARE – Star Africa Corporation today reported a 41% decline in profit after tax at ZWL109.7 million for the full year ended 31 March 2021. The Zimbabwe Stock Exchange-listed sugar refining company had reported an after-tax profit of ZWL185.9 million a year ago.

The decline in profitability comes despite a 23% increase in the top line at ZWL5.08 billion compared with ZWL4.12 billion recorded in the prior year.

In a statement accompanying the audited financial results, the Group’s chairperson, Joe Mutizwa said that a downward adjustment in the fair value on investment properties caused by loss in value of properties in the market in real terms impacted negatively on profitability.

The Group also incurred a monetary loss of ZWL163 million caused by depreciation of the value of the monetary assets it holds, subsequently leading to the 41% decline in PAT.

Meanwhile, the Group’s efforts in clearing the Secondary Scheme of Arrangement debts resulted in 99.8% of the liabilities having been paid off by the end of the year under review.

Star Africa operates two well-known brand names, Goldstar Sugar and Country Choice Foods. It also operates Properties Business and has a stake in Tongaat Hulett Botswana.

The Group’s sugar operations under Goldstar Sugars Harare (GSSH) were adversely impacted by COVID-19 related factors and plant breakdown during the period. A 3-week total shutdown in operations caused by a Covid-19 incident at the Harare Refinery between July and August 2020 and a fire that razed down the raw sugar warehouse which resulted in a decrease in production of 9% from 65,568 to 59,571 tonnes of refined sugar produced in the current year.

The business unit sold 60,386 tonnes against 63,993 tonnes sold last year, representing a decline of 6%.

“Demand for our products remained strong with volumes constrained only by production challenges,” said Mutizwa.

Positive performance was recorded at County Choice Foods (CCF) wHere sales volumes increased by 19% as the business is making significant strides in increasing its market share.

Mutizwa noted that the CCF range of products expanded in the current year as the unit continues growing with its thrust to maximize on production of sugar specialties and other sugar related products in synergy with production from Gold Star Sugars.

The Properties Business also recorded a 54% increase in turnover from ZWL13.4 million recorded in the prior year to ZWL20.7 million attributed to improved occupancy levels and higher negotiated rental amounts per month.

On regional operations, Mutizwa said that Tongaat Hulett Botswana (TBH) continued to grow and dominate the Botswana market with the associate posting a profit after tax of ZWL208.6 million of which the Group’s share was ZWL69.5 million after converting the earnings into Zimbabwean Dollars at the official exchange rate as at 31 March 2021.

“The profit after tax in the associate grew 77% from prior year in Zimbabwe dollar terms largely as a result of the depreciation of the local currency against the Pula,” he said.

On the outlook, Mutizwa said that following the settlement of legacy liabilities, the Group is now on a renewed drive to re-tool its operations, attend to plant downtime through replacement of critical machinery and grow its market share locally and in the region.

“The phased refurbishment of the dry section of the sugar refining plant (Secondary Plant) will be accelerated in the ensuing year, with work having commenced on replacement of centrifugal machines, rehabilitation of the raw sugar warehouse and procurement of an effluent treatment plant using internally generated funds and foreign currency acquired from the Reserve Bank of Zimbabwe’s auction system,” he said.

In addition, the Group will also focus on growing its footprint in n the region and beyond in the ensuing financial year by tapping more into the export market buoyed by improved production quantities and the TCCC full authorization to supply bottler ingredients to TCCC’s entire Africa Operating Unit.

“The Group envisages a resumption of exports to the Botswana market in the 2022 financial year which will increase revenue and foreign currency earnings,” said Mutizwa.

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