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Enacy Mapakame Business Reporter
A CHANGE in product mix as well as cost containment paid dividends for sugar processor, starafricacorporation, after the firm’s turnover and profitability improved significantly in the half year to September 30, 2019.

According to the group’s financial results for the period under review, turnover sky-rocketed by 388 percent to $132 million compared to $27,9 million recorded in the same period the previous year.

starafrica chairman Joe Mutizwa attributed the growth to price adjustments necessitated by inflation.

“The increase was on the back of changes in the product mix as well as the necessary inflation related price adjustments aimed at preserving the company’s ability to service the market,” he said in a statement accompanying the firm’s financial results.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 823 percent to $19,4 million compared to $2,1 million recorded in the prior year comparable period on the back of a combination of increase in turnover and cost containment measures, which restrained growth in costs.

Profit for the period went up by over 2 000 percent to $$12,4 million from $425 093 achieved in the same period last year.

Basic earnings per share increased to 0,259 cents from 0,009 cents in the comparable prior year period.

Goldstar Sugar Harare (GSSH) remained the group’s cash cow after the division contributed significantly to both revenue and profitability although production slightly declined compared to the same period last year.

GSSH produced 32 047 tonnes of refined sugar compared to 35 791 tonnes in the same period last year on the back of acute power cuts experienced across the country.

This resulted in the factory shutting down for five weeks, weighing down production.

Power cuts have been cited as one of the major challenges affecting businesses due to reduced production time.

However, for GSSH, the power situation improved after the establishment of a ring-fenced power supply arrangement which however, came with a steep tariff review.

At Country Choice Foods (CCF) EBITDA reached $5 million for the half year under review against $0,4 million realised in prior comparative period as production for the unit was 9 percent ahead of same period last year due to a change in product mix.

Products with better margins comprised a greater part of the total sales volume for the period when compared with last year.

Associate company, Tongaat Hulett Botswana’s performance surpassed prior half year levels as it achieved a converted profit after tax of $11,2 million of which the group’s share was $3,7 million against $1,8 million and a share of $0,6 million achieved last half year.

According to Mr Mutizwa, the growth comprised the unit’s actual performance in Pula terms as well as the effect of converting the Pula denominated performance into Zimbabwe currency at exchange rates which have greatly depreciated since the start of the financial year.

The properties businesses recorded a marginal increase in EBITDA to $0,3 million from $0,2 million in prior year comparative period due to a decline in rental yields.

“There was limited demand for space and there were limits to what is existing and prospective tenants could offer,” said Mutizwa.

Despite the economic challenges expected in the short to medium term, management remains upbeat of a good performance backed by various strategies put in place and exports.

“The major growth strategy for the company hinges on export markets that include existing Southern Africa markets and Central and East African markets into which the company has just begun to make inroads.

“Prospects of a better 2019/2020 farming season are expected to ease pressure on Government for food imports and will also ease other local cost pressures,” said Mutizwa.

The group did not declare a dividend in order to preserve capital for other obligations.