Starafrica says ZWG working, pleads for sustained ...

Starafrica says ZWG working, pleads for sustained tight monetary policy

Nyashadzashe Ndoro

Starafrica Corporation Limited has urged government to maintain a tight monetary stance to curb inflation and attain exchange rate stability.

This comes as the company reported a 23% increase in turnover for the year ended March 31, 2024, despite operating in a challenging environment marked by currency depreciation, high inflation, and policy fluidity.

"On April 5, 2024, government introduced a new currency, Zimbabwe Gold, leading to a period of relative exchange rate stability and low inflation.

"This can only be sustainable if the authorities maintain a tight monetary stance," the company's chairman, Dr Rungamo Mbire said.

The group's financial results were affected by the shutdown of its Goldstar Sugars plant for three months due to raw sugar supply challenges, which have since been resolved. The company also incurred increased costs of key raw materials and other overheads.

Despite the challenges, the group remains optimistic that the Reserve Bank of Zimbabwe's policy interventions will contribute to a more stable operating environment.

"The industry welcomes the move by the Government to reinstate import duties on selected products, including white sugar, with effect from February 1, 2024," said Dr Mbire.

However, the company expressed concern over the introduction of tax on added sugar in beverages and additional withholding taxes, as well as the change in the Value-Added Tax status for white sugar from zero-rated to exempt, which adversely impacted overall demand and margins.

The group's total turnover increased by 23% to ZWL$1.90 trillion, while operating loss was ZWL$679 billion, primarily due to the plant shutdown and increased costs. In historical cost terms, total revenue increased by 789% to ZWL$378 billion, while operating profit decreased by 910% to a loss of ZWL$18.47 billion.

The company's associate, Tongaat Huletts Botswana, reported a profit of ZWL$21 billion, with Starafrica's share being ZWL$7 billion.

The board has resolved not to declare a dividend for the period under review. The company also announced changes to its board, including the retirement of Mr Robson Nyabadza as Chief Executive Officer and the appointment of Dr Mavellas Sibanda as the new CEO, effective July 8, 2024.

In his statement, Dr Mbire expressed gratitude to the group's stakeholders, including the government, for their support during a challenging year.

"We appreciate the government's efforts to stabilise the economy and create a conducive business environment," he said.

The company's financial results were prepared under the inflation-adjusted accounting basis, in compliance with International Accounting Standard 29 - Financial Reporting in Hyperinflationary Economies.

In a statement, the company said, "The group remains optimistic that the RBZ policy interventions will significantly contribute to a more stable operating environment. With the raw sugar supply challenges largely resolved and the plant refurbishment and replacement program on track, the business expects a volume recovery going forward."

Starafrica Corporation Limited is a leading manufacturer of sugar and sugar-related products in Zimbabwe, with a significant market share in the country.