The Zambia Sugar, one of the leading sugar producers in Zambia, has reported a significant increase in its revenue for the year ended 31 August 2023.
According to the company’s financial report, its revenue grew by an overwhelming 14% increase to K5.827 billion driven by a number of factors including a 12% improvement in the weighted average selling price for domestic and export sales which contributed heavily to this development.
Sales to the export market increased by 28% driven by strong regional demand, good logistics management and availability of stocks following the slowdown in domestic demand.
Compared to the previous year, domestic sales volume was negatively impacted by the influx of illegal imports, and low disposable income for rural households.
According to the Company’s Financial report availed to the Zambian Business Times – ZBT, by the Company Secretary, Harriet Kapekele – Katongo, the company’s management team also implemented several strategic initiatives that helped to drive growth and increase profitability. These initiatives included implementing promotions and increased investment in marketing and sales.
Operating profit for the year under review was K1.248 billion compared to K1.243 billion in the previous year. The improvement in performance is due to improved price realisation and cost management despite significant increases in key input costs (fertilisers, chemicals, electricity, employee costs, packaging and fuel). Overall, costs increased by 10% which was in line with inflation.
Meanwhile, Finance costs for the year ended 31 August 2023 decreased by K35 million to K40 million improving interest cover from 16.7 to 31.5 times. The business closed with a positive cash position after paying the outstanding long-term debt of K42 million.
Profit after-tax for the year ended 31 August 2023 also decreased by K70 million to K935 million due to a 3% increase in effective tax rate.
Headline earnings for the year ended 31 August 2023 decreased to K935 million from K1 005 million for the previous year. Earnings per share decreased by 7% from 317.5 ngwee per share to 295.6 ngwee per share.
The Board has since recommended a total dividend of 349 ngwee per share (2022 – 94.44 ngwee) to be considered for approval by shareholders at the Annual General Meeting scheduled for 28 November 2023. The total dividend will amount to K1 104 million.
This consists of a base dividend of 191 ngwee and a special dividend of 158 ngwee. The company has a dividend policy of distributing up to 50% of free cash flow and this maximum figure amounting to 191 ngwee is recommended and forms the base dividend.
Recognising the strength of the balance sheet following 3 years of earnings above K1 billion and the repayment of all long-term debt, the directors have also recommended a once off special dividend of 158 ngwee per share.
The strong financial performance of Zambia Sugar is a testament to the company’s commitment to excellence and its focus on delivering value to its customers and shareholders.
