Illovo to cushion customers amid rising inflation rate
Illovo Sugar (Malawi) plc says it will continue with its efforts to cushion its consumers by ensuring sugar prices do not go up above the inflation rate despite the escalating production costs.
The company’s managing director Lekani Katandula said during an investor forum in Blantyre on Wednesday that they will continue to keep sugar prices at affordable rates.
He said: “Our price increases in the last decade have been below local inflation. It is, therefore, important for consumers to note that we have and continue to ensure that we are doing all we can to cushion them despite prices of commodities going up.”
But Katandula said as costs of raw materials and production continue to increase, the listed sugar manufacturers may have to look into their pricing structure.
In the financial year ended August 2021, the sugar manufacturer posted a profit after-tax of K20.4 billion up from K2.7 billion in 2020, representing an increase of 650 percent.
The huge rise in profitability attracted criticism from various stakeholders, including consumer rights activist John Kapito, who said the development speaks volumes of the company’s unrealistic pricing of its product on the local market.
He appealed to the company to consider lowering the price of sugar to make it affordable for the majority of people.
But Katandula said Illovo Malawi only effected a six perfect increase, which was less than the 2021 inflation rate of 10 percent.
He argued that the profit the company made was not due to overpricing but controlling costs.
He said: “We may wish to know that despite this minimal increase, we saw an improvement in total sales. The market responded positively thus growing our domestic market by 17 percent during the year.”
Illovo Malawi finance director Kelivin Msimuko said the company will continue to control its costs and improving efficiency in the running of its business.
“Regardless of the emerging risks, our company will continue to be efficient and reduce unnecessary costs.” he said.
With a market capitalisation of K214 billion and 713 million shares on issue, Illovo Sugar (Malawi) plc share price traded at K299.97 at the close of business on MSE on Thursday.
