Zimbabwe Stock Exchange listed entity, starafrica corporation Limited, says it is working on measures to enhance sustainable growth and profitability supported by exports.
Part of the measures include expanding product range for its Country Choice Foods (CCF), which chairman Joe Mutizwa said the company was looking at repositioning the business to take advantage of prevailing growth opportunities in the local and export food industries and markets.
“The Group is working on several strategies for sustainable growth and profitability into the future, hinged on exports, increasing market share in the household direct consumption segment and expanding CCF’s product range,” he said in a statement accompanying the group’s financials for the year to March 31, 2020.
According to the chairman, CCF products continued to be market leaders against competitor products, including new entrants although sales volumes fell 8 percent on the back of low disposable income.
The business was affected by flour shortages in the baking industry, which is one of its major markets.
At group level, despite the economic headwinds obtaining in the country coupled with the effects of Covid-19, management is upbeat the policies Government is working on may bear positive outcomes if implemented properly.
“The Group, however, believes that the policies being implemented by Government, although resulting in initial unfavourable pressures, will eventually lead to a better business environment.
“If implemented correctly, the recently introduced foreign currency auction system should stabilise the exchange rate with positive ramifications in the economy,” said Mutizwa.
During the year to March 31, 2020, profit came in 19 percent lower at $54,5 million compared to $68,1 million recorded in the prior year as sugar production and sales took a dip.
According to the group, profitability was also impacted by a fair value adjustment on investment properties and net finance costs which resulted from foreign exchange losses on foreign borrowings.
Total turnover rose by 114 percent to $1,21 billion compared to $565 million realised in prior year.
Sugar production at Goldstar Sugars Harare (GSSH) fell 9 percent to 65 568 tonnes compared to 72 252 tonnes of refined sugar produced in prior year.
“The decrease in production was attributable to prolonged power outages experienced in July and August 2019 and intermittent water supplies which adversely affected output at the sugar refining plant during the year under review. Power supply, however, improved significantly in the last quarter of the year,” said chairman Joe Mutizwa.
The business unit sold 63 993 tonnes, which was 10 percent below 71 683 tonnes sold last year. Sales volumes were in line with production and included exports generated from new markets that were developed in the region during the year under review.
The properties business recorded a 12 percent decrease in turnover to $4,4 million from $5 million recorded in prior year due to relatively lower rentals that obtained during the year under review consequent upon the economic downturn which affected most of the tenants.
The regional operation, Tongaat Hulett Botswana (THB) maintained its dominance of the Botswana sugar market. The associate recorded a profit after tax of $34,6 million of which the group’s share was $11,5 million after converting the earnings into Zimbabwean dollars at the official exchange rate as at March 31, 2020.
Despite the effects of the Covid-19 pandemic, the business continues to operate normally and demand for its products is stable.
The group did not declare a dividend to preserve capital in light of obtaining economic uncertainties as well as the group’s scheme of arrangement obligations.