Star Africa defers dividend to save for retooling

SUGAR processor, Star Africa Corporation says it will withhold dividend to its shareholders for the year ended March 2022 in a bid to save money for an expensive plant and equipment maintenance programme.

The group had also earlier suspended the interim dividend citing the need to channel resources towards the retooling exercise.

This was revealed in the organisation’s financial results for the year ended 31 March 2022.

“Considering the company’s focus on refurbishing and replacing critical items of plant and machinery, the Board has taken a decision not to declare a dividend for the year ended 31 March 2022.”

The company which recorded a profit for the year of $1,45 billion in historical terms said it will continue with its focus on retooling the business, with a view towards increasing productivity across its strategic business units.

It said the retooling programme was aimed at a budgeted production and sales throughput of 100 000 tonnes for the 2023 financial year.

“Goldstar Sugars sales volumes grew from 60 388 tonnes recorded in the 2021 financial year to 82 500 tonnes in the year under review.

“This drove a 50 percent increase in the Company’s turnover during the period under review, from $8,78 billion to $13,16 billion. The Group’s operating profit grew by 255 percent, from prior year’s $479,61 million to $1,70 billion,” reads the statement.

The company said the improved financial performance for the year allowed it to substantially settle the legacy liabilities, which were significant in the prior year.

The reduction in debt levels resulted in notable savings in interest costs and foreign exchange losses. Star Africa Corporation said the finance cost reduced significantly, from $104,28 million incurred in prior year to $1,45 million.

“Exchange losses, which were being incurred on foreign currency-denominated liabilities, did not recur during the year under review as the business settled foreign obligations in the 2021 financial year.

“Consequently, the Company recorded a $45,92 million exchange gain in the current year, mainly emanating from foreign currencydenominated cash and bank balances.

“This is a marked improvement from the $347,56 million exchange loss that was recorded in the 2021 financial year.”

In historical terms, Star Africa Corporation said total turnover increased by 166 percent, from prior year’s $3,83 billion to $10,18 billion, while operating profit increased by 202 percent, from $563,29 million to $1,70 billion.

This increase was buoyed by a 38 percent increase in production volumes at the refinery from 59 571 tonnes recorded in 2021 to 82 399 tonnes in the year under review.

The company said the increase was primarily due to capital investments made and a rigorous equipment maintenance regime, introduced during the year under review and has reduced the refinery’s downtime.

Star Africa Corporation said demand for granulated sugar remained high in the market resulting in an increase in sales volumes by 37 percent.