Illovo Malawi touts its business structure
Illovo Sugar (Malawi) Limited has said its business structure which combines agriculture and milling operations enhances its productivity through the proximity of cane to the mills.
The Malawi Stock Exchange (MSE)—listed sugar manufacturer, in response to its ranking in Africa’s top 250 companies in the African Business’ annual rankings, said it also supports local sugar cane growers with agricultural advice and access to the mills for their crop.
“We also treat our relationship in Malawi as a partnership whereby we are demanding in respect of performance and results, but at the same time give back to the communities in which we operate,” said Irene Phalula, the company’s public relations officer, in an e-mail response to questions.
The influential African Business magazine for June 2013, based on the market capitalisation of companies on March 31 2013, ranked Illovo, 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.
Phalula said the company has a well-balanced model of both growing and milling cane and has managed to extract significant production synergies.
“As a major taxpayer, export currency earner and beneficial contributor to the economy, we have also earned the respect and support of Malawi’s commercial and bureaucratic communities which have been good for business efficiency and operations generally,” she said.
The company, according to Phalula, can only exist with the support of the communities in which it operates, hence aiming to model best corporate citizenship and return in kind to Malawi.
A market analyst, Benson Jere, who is also fund manager at NBM Capital Markets Limited, said the performance of Illovo Malawi is not surprising because it has been increasing its hectarage of sugar production, is producing quality products and 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.
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 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.
