Illovo Malawi still glowing in Africa
Illovo Sugar (Malawi) Limited’s performance continues to shine on the African continent, with the latest being ranked one of the only top performing listed companies in Malawi in Africa’s top 250 companies in the African Business’ annual rankings.
The influential African Business magazine for June 2013, based on the market capitalisation of companies on March 31 2013, has ranked the Malawi Stock Exchange (MSE)—listed sugar manufacturer, which has been put in agriculture and raw materials industry, on position 222, with a value of $313 million (K107 billion). This is, however, a drop from last year’s position 141.
Illovo has beaten some companies such as Innscor Africa from Zimbabwe, Namibia Breweries, Group Five (South Africa), Commercial Bank of Ghana and Zambia Sugar.
Illovo Sugar (Malawi) Limited’s performance in Malawi and, indeed, in Africa is not surprising, according to market analyst Benson Jere, who is also fund manager at NBM Capital Markets Limited.
He told Business News yesterday the company has been increasing its hectarage of sugar production, is producing quality products and is benefiting from the European Union (EU) sugar quota exports.
“The company has been able to penetrate markets in Mozambique, Tanzania and Zambia. The company has also been doing well in terms of revenue and profitability. It is also ranked one of the best performing companies among its peers in sub-Saharan Africa,” explained Jere.
He said the company has been enjoying the synergies with its parent company, Illovo Sugar Group, in terms of expansion drive which is a big challenge for MSE—listed companies.
The company, for the fourth year running, has been a top contributor to Illovo Sugar Group’s operating profit at 47 percent beating Zambia (25 percent), South Africa (nine percent), Swaziland (eight percent), Mozambique (six percent) and Tanzania (five percent), according to the group’s preliminary report for the year ended March 31 2013.
In the 2011/12 financial year, Malawi contributed 39 percent to the group profits, trailed by Zambia, Tanzania and South Africa at 33 percent, 11 percent and seven percent respectively.
In the year ended March 2013, Illovo Sugar (Malawi) Limited profit peaked at K20 billion, a 161 percent jump from the previous year’s K8 billion, amidst a difficult economic environment characterised by the devaluation and floatation of the kwacha in the 2012.
The sugar manufacturer said the monetary policy decision effected in May 2012 exerted “pressure on the cost of wages and also inputs particularly electricity, fuel and maintenance materials.”
“All these increases compounded pressure on the profitability of the company, but the implementation of phased sugar price increases during the year and the improvement in revenue stream in kwacha terms from the sale of sugar into favourably prices export market established, through our well-organised marketing structures enabled the company to protect its operating margin and ensure a continuing return to its shareholders,” read the financial statement accompanying the results.
The company whose balance sheet grew 55 percent to K63.9 billion from K41.2 billion, said the sugar cane production for the year totalled 2.5 million tones with 15 percent grown by smallholder farmers.
Revenue jumped 73 percent to K63.2 billion from the previous year’s K36.5 billion.
