Malawi Stock Exchange (MSE) listed Illovo Sugar Malawi has indicated that it expects its profit to decline by about 35 percent in the half year period to February 2024, a published trading statement has shown.
According to the statement, the development has been necessitated by a drop in production during the period.
“Illovo Sugar (Malawi) plc accordingly advises that the profit after tax for the six-month period ending 29 February 2024 is expected to be between K22 billion and K25 billion representing a decrease of between 35 percent and 26 percent from the prior period profit after tax of K33.7 billion.
“The decrease in profit after tax is attributable to a drop in production caused by lower cane yields resulting from the impact of Cyclones Ana and Freddy, substantial cost inflation, and foreign exchange losses of K17 billion due to the devaluation of the Malawi Kwacha against the US Dollar,” the statement reads.
Meanwhile, during a stakeholder meeting last week in Blantyre, the company’s Managing Director, Lekani Katandula said the persisting sugar supply shortages are a result of similar challenges.
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He indicated that the company is expected to resume production in mid-April and therefore supply of the product should be restored by the end of April.
“…I have just alluded to a lower production than normal. Another factor is forex shortages which means that while in previous years we would have been able to stop exporting, we’ll be able to access forex on the market, this time around we couldn’t so we still had to export some sugar because we needed to keep operations running. Even at times when we were running out of diesel for instance which we normally buy in kwacha but given the diesel shortages that recurred a number of times, we had to complement the local diesel supplies with direct imports which we had to pay for in dollars and therefore there was a need to keep exporting.
“Another element that was significant is the fact that our sugar prices in Malawi if you look back to all of 2022/23 were lower than our neighbors. This is an area that elicited a bit of debate publicly. Anybody that lives in the border areas would have experienced people buying sugar from Malawi and taking it to Zambia, Mozambique and Tanzania,” Katandula said.
One of the company’s shareholders, Bernadette Maele, said they believe that the company will bounce back in no time.
