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.