• Goldstar Sugars volumes increased 38% in the June quarter after Star Africa carried forward lower prices introduced in the previous financial year to defend the domestic market
• Group revenue increased 31% and operating profit before the associate rose 58%, even as gross margin eased to 17% from 18% as input costs absorbed part of the volume benefit
• Star Africa now plans to unlock underutilised production capacity, with plant availability improving after quarter end following the arrival of critical spares and more stable utility supply

Harare-  Star Africa Corporation, Zimbabwe’s sugar producer and refiner has taken a decision to reduce sugar prices, producing the strongest evidence yet that the company can recover earnings through higher refinery utilisation, with Goldstar Sugars sales volumes rising 38% in the first quarter ended June 2026 and group operating profit advancing 58%.

The result advances a strategy that began in the previous financial year when the group lowered prices to improve the competitiveness of locally refined sugar. The June quarter now provides evidence that customers have responded to that intervention.

Goldstar is selling substantially more sugar under the lower price architecture. Group revenue increased 31% while operating profit before the contribution from Star Africa’s associate increased 58%. Gross margin declined by one percentage point to 17%, placing the earnings model increasingly on higher throughput, operating efficiency and tighter cost control.

The group  entered the current cycle facing the need to defend Goldstar’s competitive position while stimulating demand across its industrial and retail customer base. It responded with strategic lower price adjustments during the latter part of the previous financial year. Those reductions improved competitiveness, defended market share and stimulated demand.

Goldstar Sugars sales volumes increased 38% against the comparable quarter. Country Choice Foods added another layer of growth, with sugar specialties volumes rising 19% on sustained customer demand.

Those increases lifted group revenue by 31%, while operating profit before the share of associate earnings increased 58%. This means operating earnings grew substantially faster than revenue even as gross margin declined. That is the analytical feature management now has to reproduce.

A refinery carries labour, maintenance, utilities, quality control and administrative costs across different production levels. Higher throughput spreads a large part of that cost base over more tonnes of sugar. When additional production can move through existing infrastructure without an equivalent increase in fixed expenses, operating profit can accelerate faster than revenue.

Star Africa’s June quarter shows that process beginning to work. The company has not disclosed enough quarterly operating data to calculate utilisation or contribution per tonne. The published numbers still establish the direction. Volumes increased sharply, revenue followed and operating profit expanded at an even faster rate.

The pricing decision has therefore moved beyond defending market share, and it  is becoming a mechanism for raising factory utilisation. The 17% gross margin establishes the immediate boundary around that strategy. Gross margin declined from 18% in the comparable quarter as input cost inflation absorbed part of the benefit generated by higher sales volumes.

Fuel was one of the main cost pressures identified by management. That creates a clear earnings equation, lower prices stimulate demand, higher demand increases refinery throughput, higher throughput allows Star Africa to use existing capacity more effectively, and input inflation removes part of the additional contribution generated by those tonnes.

The model creates shareholder value as long as the additional volume produces enough gross profit dollars to compensate for the thinner margin percentage and the additional operating expenses required to service the larger business.

The June quarter passed that test because operating profit increased 58%, and the next quarters will establish its durability. Further margin compression accompanied by slowing volumes would weaken the economics of the strategy. A stable margin around current levels alongside sustained volume growth would allow utilisation to remain the dominant earnings driver.

An improvement in margin alongside rising volumes would produce a considerably stronger recovery.

Management should therefore evaluate additional pricing actions against incremental contribution, not market share alone.

The appropriate question is how much additional operating profit each pricing intervention produces after refining, distribution and working capital costs.

The group intends to unlock previously underutilised capacity during the remainder of the financial year as demand remains strong. This makes plant availability central to the earnings outlook. Goldstar experienced water supply interruptions during the June quarter. Production was also affected when the delivery of critical spare parts was delayed by logistics disruption associated with conflict in the Middle East.

Both problems reduced plant availability while demand was accelerating. The group commissioned additional boreholes to improve water supply, while critical spares have since arrived. Utility availability has improved since the end of the quarter, and such developments should increase productive operating hours

Stable water supply reduces interruptions, available spare parts shorten maintenance downtime, while improved utilities increase the number of hours during which the refinery can run. Each of those changes increases the amount of sugar that can move through the installed production base.

That is where the next earnings upside sits. If plant availability improves and production rises toward the pace being set by sales, Star Africa should be able to exploit operating leverage further. If production remains constrained while demand continues expanding, the company risks losing part of the market share it has just won or being forced to manage customer demand against limited product availability.

Domestic Market Share Has Become More Valuable

The 38% growth at Goldstar also provides evidence of stronger domestic sugar demand. For Star Africa, that demand reaches the refinery primarily through industrial and consumer sugar markets. The pricing response has allowed the company to capture a larger share of it.

This is commercially important because increasing domestic refinery utilisation strengthens Star Africa without requiring the company to rely heavily on volatile export markets. The domestic sugar market allows Star Africa to serve beverage manufacturers, confectionery producers, food processors and other industrial consumers within a comparatively short distribution network.

The group also maintains the quality certifications required to supply major industrial customers. Those certifications become increasingly valuable as volumes increase. An industrial customer requires consistency in sugar quality, reliable delivery and sufficient production capacity. Once those requirements are being met, competition moves beyond simple price into reliability of supply.

Star Africa can therefore convert the current price driven volume recovery into a stronger customer position if production availability improves.

Meanwhile, the growth was not confined to granulated sugar., Country Choice Foods increased volumes 19% during the quarter as sustained customer demand supported the sugar specialties business, and the group plans to expand distribution further. That division can become increasingly important to the wider margin equation.

Granulated sugar provides the largest volume platform. Sugar specialties allow Star Africa to process, package and distribute sugar in different forms and products, creating additional opportunities to extract value from the same production base. A broader specialty portfolio can reduce dependence on the economics of basic granulated sugar and give management additional channels through which to monetise increasing refinery throughput.

The next phase should therefore combine Goldstar volume recovery with deeper Country Choice distribution. If Country Choice continues growing at double digit rates while Goldstar volumes rise, product mix can increasingly contribute to protecting group margin.

Botswana Is the Main Weak Point

The associate was the major area of deterioration during the quarter. The group’s share of associate profit declined 25% from the comparable period, attributed to product supply constraints in Botswana. The group is working with the associate to address those shortages and sees an opportunity to increase production and sales volumes.

The Botswana weakness connects directly to the capacity question at Goldstar, while domestic demand is rising, and Country Choice demand rising, Botswana has unmet supply, and all three require product. Star Africa therefore already has several channels capable of absorbing additional production if the refinery can operate more consistently.

This strengthens the economic case for eliminating plant downtime. Every hour of restored production capacity can potentially serve an identified market rather than create speculative inventory. That is a considerably stronger position from which to increase utilisation.

However, the group still faces a significant cost challenge. Gross margin declined to 17% because higher input costs absorbed part of the volume benefit.

Fuel costs remain a major concern. The same geopolitical tensions that delayed critical spares also contributed to higher energy prices and logistics costs. This means management cannot depend solely on additional production. The refinery has to increase output efficiently.

Higher volumes produced through excessive overtime, elevated maintenance expenditure, higher transport costs or inefficient energy consumption could eventually erode the operating leverage recorded during the June quarter.

Cost containment therefore has to accompany the capacity expansion. Management needs to measure the incremental cost of every additional tonne produced as plant utilisation rises. The central financial test is whether operating profit continues to grow faster than revenue, and that was achieved in the first quarter.

Maintaining that relationship would show that Star Africa is extracting genuine operating leverage from its recovery. A reversal would show that incremental volumes are becoming progressively more expensive to produce.

The next results must show production catching demand.  Star Africa has now moved from an earnings recovery into a scaling test, and the June quarter gives management four strong starting numbers. Goldstar volumes increased 38%, Country Choice volumes increased 19%, revenue increased 31%, and operating profit increased 58%., with gross margin providing the principal caution at 17%.

The board and chief executive should now make plant utilisation and incremental contribution the primary operating measures for the remainder of the financial year. Goldstar production needs to rise as water availability improves and critical spares restore factory uptime. The 17% gross margin should operate as a key threshold when management evaluates further price interventions. Country Choice distribution expansion should be accelerated where specialty volumes improve the value captured from the wider sugar platform.

Also, Botswana supply should be restored while spare production capacity becomes available.

The next trading update should be judged on four numbers: Goldstar production growth to show if idle capacity is becoming output, sales growth to test if the 38% jump is sustainable, gross margin to confirm the extra volume is still profitable, and operating profit growth to prove refinery utilisation is delivering leverage, and while the June quarter already answered the pricing question with customers responding, the next test for Star Africa is whether it can produce enough sugar at a controlled cost to turn that demand into a larger and more durable profit base.

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