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Illovo profits rise to K7.1 billion

Profits for local sugar producer Illovo Sugar Malawi have jumped from K1.87 billion to K7.1 billion the company realised last year.

The figures signal an improved business performance compared to last year when the company faced a decline in end-of-year profits attributed to adverse weather conditions that hit the country at the onset of 2015/16 milling season.

In its audited financial statements for the year ended March 31, 2017 and published in the local media on Wednesday, Illovo said efforts by its commercial teams to switch products from lower European Union bulk raw sugar exports to higher value regional markets improved revenue flows.

“Economic conditions during the year remained challenging with foreign exchange and interest rate movements affecting the business. The focus on performance improvement initiatives continued to drive cost reduction and efficiencies throughout the company, including a structural review of the cost base,” the statement reads in part.

Illovo Board of Directors stress that agricultural operations at Dwangwa and Nchalo were severely hit at the start of the 2016/2017 season by dry conditions and end of the summer rains particularly impacting on the Nchalo Estate.

“In order to stimulate sugar sales within the local market, extensive research was undertaken to fully understand consumer preferences and requirements. This led to the launch of a new range of products in varying pack sizes to address consumer affordability issues. The launch and marketing drives resulted in six percent increase in sales to the domestic market for the full year. Year-on-year sales into the regional market and to the USA also increased,” Illovo said.

Early this year, Illovo forecast a profit after tax 60 percent higher than the prior period.

The company attributed this to a more stable domestic consumption market and structural cost changes implemented across the business.

In the current financial year, Illovo Sugar has also changed its accounting policy for the valuation of sugar cane roots following the amendment of International Accounting Standard 41, which now permits the valuation of such assets at a cost less accumulated depreciation.

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