Shareholders of Malawi Stock Exchange- listed Illovo Sugar Malawi will have to wait a bit longer before they resume getting dividends as the firm has, once again, denied them interim earnings despite posting strong half year results.
The sugar maker has posted a K7 billion profit for the half year ended February 2018.
In its half year financial statement, Illovo said the underlying business improvements and continued strong free cash flow generation mean that the company is likely to resume payment of dividends by the end of this financial year.
“Finance costs were adversely impacted by foreign exchange losses on the R345 million holding company loan as the rand appreciated significantly against the kwacha,” Illovo Sugar Malawi Board Chairperson, Gavin Dalgleish, said in published statement.
He said settlement of such a loan has been prioritised and the balance is now down to R75 million, adding that the plan is to fully repay the balance before August 2018.
“After taking into account business cash generation and resultant cash flow constraints no interim dividend will be payable,” Dalgleish said.
During the firm’s 53rd Annual General Meeting held in Blantyre in November last year, minority shareholders wondered why the company kept on postponing payment of dividends in preference settling a K23 billion debt.
Dalgleish said in the statement that both Dwangwa and Nchalo estates and surrounding grower schemes continued to be affected by high levels of yellow aphid, red spidermite infestations and the fall army worm which resulted in costly chemical control requirements and negatively affected crop yields.
He said, despite the challenges, which also included grower on-going financial difficulties, the business continued to deploy detailed operational strategic recovery plans including the installation of additional power generation sets at Dwangwa and Nchalo of more efficient drip irrigation equipment