Illovo H1 profit down 37 %
Illovo Sugar (Malawi) Limited yesterday said its half-year profit dropped by 37 percent to K9.1 billion while headline earnings have decreased by 57 percent, on the account of adverse market and weather conditions.
The Malawi Stock Exchange (MSE)-listed sugar manufacturer, in its financial results for the six months ended September 30 2015, said despite initial rainfall, dry weather conditions which persisted for the duration of the season affected its operations.
Illovo said lake and river water levels are at their lowest, which together with erratic electricity power supply, limited the ability to irrigate crop sufficiently.
“These stressed growing conditions have not only reduced cane yields, but also increased vulnerability to pest and disease,” reads the statement accompanying the results.
The company has since said the impact on both its own cane and out grower cane will reduce overall sugar production for the season, offsetting the benefit of the improved factory performance at its Nchalo mill in Chikwawa.
Illovo’s performance on sales was not spared as its sales into the domestic market for the half-year were almost 40 percent lower than the same period last year.
Similarly, sales into the regional and European Union (EU) raw and direct consumption markets were also below forecast, which according to the company was affected by, among others, unfavourable market pricing pressures that mitigated to a small extent by additional sales to the United States (US) although at low prices.
Illovo also says illegal importation of sugar from neighbouring countries is hurting its operations.
The company said importation of sugar has impacted on the domestic market and ongoing import licence restrictions implemented by Zimbabwean authorities.
The company has since declared no dividend to its shareholders due to the weather-related crop decline which has led to difficult environment and related impact on the company’s cash flows.
The sugar manufacturer further says it expects a three percent decline on sugar production for the full season as compared to the previous season. n
