Illovo Sugar Malawi on Thursday reported a 22 percent decline in end of year profit due to low sugar production and adverse weather conditions that hit the country at the beginning of 2015/16 season.
Overall headline earnings also declined by 59 percent, Africa’s largest sugar producer said Thursday when it released extracts from its audited financial statements for the year ended March 31, 2016.
Illovo says the unfavourable weather conditions resulted in inconsistent supply of both water and electricity for irrigation purposes which eventually impacted negatively on crop yields and contributed to widespread pest infestations of the already stressed crop.
Sugar production was also hit by adverse weather conditions declining by five percent to 269,000 tonnes.
“Overall sugar sales into the local and export markets amounted to 255,000 tonnes, a decrease of seven percent over the previous year’s total of 273,000 tonnes,” Illovo said.
The statement also indicates that domestic sugar sales went significantly down by 40,000 tonnes mainly as a result of local unfavourable economic conditions and the illegal entry of foreign sugar into the Malawi market.
“Generally the economic conditions remained challenging with significant exchange and interest rate movements. The business embarked upon deploying further continuous improvement initiatives with a structural review of the cost base of the business to counter some of the negative financial impacts,” the company said in the statement.
Looking ahead, Illovo expects sugar production to marginally improve to 2.2 million tonnes on prospects of improvements in weather patterns and changes to the cane land fallow programme being implemented at Dwangwa and Nchalo Estates.
The group says it has resolved not to pay any interim dividends for the year ended 31 March 2016.