Zambian Business Times

Illovo Zambia half year earnings slide 80% on bad weather...


• Brazil has flooded sugar markets;

• Lower interest costs in part offset adversity;

Half year earnings for Lusaka Securities listed Illovo local operation Zambia Sugar ( ZSUG) declined by 79.6% to ZMW18.1mn from ZMW89mn on account of a flooded global sugar market and thinning of export markets as a consequenc­e of Brexit. This is the first time Zambia Sugar plc is ever reporting half year performanc­e earnings after its financial reporting year changed to February. Revenues generated in the period declined 19% ( ZMW250mn) to ZMW1.064bn accounted for by both sugar production and cane growing lines that slowed by 18% and 21.7% respective­ly. The entities operating profit halved to ZMW150.18mn levels as its asset base narrowed 8.27% to ZMW3.39bn.

Zambia Sugar was adversely impacted by changing weather patterns in addition to an advent of pest and disease. However Brazilian sugar has flooded the global markets suppressin­g pricing of sugar which has affected the Nakambala grown commodity which has also suffered a thinning of export markets as part of the Brexit autopsy. On the upside, the company benefited from monetary policy easing that manifested in a 48.5% decline in net finance costs.

Management has however committed to tightening costs to improve this half year position to supposedly complete the remaining final half year on a bullish note.

As at 5pm Zambia Sugar shares were trading for ZMW2.17 a share on the local bourse.

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