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Illovo Malawi upbeat on good tidings

Consumers to have adequate sugar supply
Consumers to have adequate sugar supply

Illovo Sugar (Malawi) Limited expects a sugar cane harvest of similar size as that of the previous year, given a return to the normal climatic conditions, the company’s outgoing chairperson Graham Clark has said.

In the 2012/13 season, the company produced cane amounting to 2.5 million tonnes of sugar cane which included 360 000 tones produced by Malawian outgrowers.

Clark, speaking at the Malawi Stock Exchange (MSE)-listed sugar manufacturer’s 48th annual general meeting (AGM) in Blantyre on Friday, said the rationalisation of crop cycles and variety dispositions will result in a slightly reduced age of the cane crop.

“Further building upon the improved factory throughput and better production operational parameters during the last crushing season, together with a continued investment in factory continuous improvement programmes and capital projects, should result in a marginal increase in overall sugar make,” he told the shareholders.

Last season, domestic sugar sales to consumer and industrial markets was at 55 percent of total sugar sales, with exports to preferential markets in the European Union (EU) and USA comprising 32 percent of sales volumes and the balance was sold into the regional markets, particularly Zimbabwe.

Clark said local market sales will again be given preference, but added that sales into the market will reflect modest growth next season because of the “expected continuation of the uncertain and difficult economic environment”.

He said this means that the company will have to carefully manage its stock levels to ensure adequate sugar supply to the domestic consumers and that the company will take advantage of export opportunities as they arise to maximise the revenue stream.

“The business will again have to manage its costs carefully in the light of inflation, exchange and interest rates. Headline earnings are expected to show a moderate increase on a year-on-year basis,” said Clark, who is heading to West Africa to assist in the development of the sugar industry there.

Clark, managing director of Illovo Sugar Group, the parent company of the Malawi subsidiary, will be succeeded by Gavin Dalgleish, group operations director.

In the year, the company expects to spend K8 billion on capital projects in both the agricultural and factory operations to further secure the ongoing growth and future sustainability of the business.

At the AGM, shareholders approved the payment of a total dividend of K14.65 per share.

Illovo Sugar (Malawi), whose share price closed at K211 each, has 713 million shares on issue on the local equity market.

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