Goldstar Sugars volumes drop 41pc on cheap imports
SUGAR processor starafricacorporation subsidiary Goldstar Sugars (GSS) recorded a 41 percent decrease in sales volume of granulated sugar for the half-year to September 30, 2023 compared to the same period in the previous year.
Group chairman Dr Rungamo Mbire said the decline was mainly due to depressed demand caused by the influx of cheaper sugar imports, after the suspension of duty on basic commodities.
Additionally, the refinery was closed for three months from July to September 2023 owing to relative upward price adjustments by the sole local raw sugar supplier, which made the business’ products uncompetitive relative to imports.
“The first half of the year saw the company experience depressed sales, brought on by a three-month-long shutdown, caused by an upward price review of raw sugar. This was experienced at a time when sugar imports were duty-free, following promulgation of Statutory Instrument 80 of 2023 (SI 80 of 2023),” said Dr Mbire.
“The sole local supplier of raw sugar to starafricacorporation increased its prices making the company’s products uncompetitive relative to the cheaper imports. As a result, the company experienced depressed sales within this period,” he added.
The pricing issues were, however, resolved with the raw sugar supplier at the end of September 2023. According to Dr Mbire, the company imported part of its raw sugar requirements from Zambia while negotiations were underway with the local supplier.
“The negotiations were successfully concluded, and operations resumed in October 2023,” he said.
Performance at its other unit, Country Choice Foods (CCF) remained depressed during the period under review as sales volumes of sugar specialties went down.
The group indicated that sales volumes dropped by 46 percent due to the erratic supply of raw materials from GSS.
“The company is working on increasing its production capacity and satisfying local demand for its granulated sugar and specialties,” said Dr Mbire.
In terms of financial performance, the group recorded a 35 percent increase in turnover in the period under review, from $73,52 billion to $99,41 billion.
However, operating profit receded by 723 percent to negative $29,45 billion from $4,73 billion in the prior year's comparative period. The lower operating profit was a direct result of reduced sales volumes and increases in operating costs in real terms.
In historical terms, revenue increased by 382 percent to $76,2 billion from $15,82 billion recorded in the prior year comparative period, while operating profit decreased by 432 percent from $3,20 billion to negative $10,64 billion.
Despite the challenges faced in the half-year period, the company has strategically implemented measures aimed at ensuring a return to profitability and positive cash flow generation.
“Management has assessed the group’s going concern position by considering the current trading activities, financial position, and the projected requirements.
“The industry has sufficient production capacity and capability to avail good quality sugar in sufficient quantities to meet the country’s requirements. The Company looks forward to seeing an improvement in performance in the near future,” said Dr Mbire.