Gold Star Sugars hits hurdles with reduced sales a...

Gold Star Sugars hits hurdles with reduced sales amid economic uncertainty

Audrey Galawu

Gold Star Sugars reported reduced sales volume of granulated sugar for the year ended March 31, 2023, with 82 500 tonnes sold in the previous year down to 82 321 tonnes.

This was on the back of pressure from imports after promulgation of Statutory Instrument 98 of 2022.

In its financial report, GSS chairman, Dr Rungamo Mbire said the company’s production was adversely affected by raw sugar stockouts and power outages which also resulted in production volumes reducing by 6%, from 82 399 tonnes in the prior year to 77 270 tonnes during the year under review.

Mbire said the year under review was characterised by rising inflationary pressures and exchange rate volatility, combined with heightened economic uncertainty emanating from the Russia-Ukraine conflict.

“This continued to undermine economic recovery from the challenges associated with the Covid-19 pandemic in the prior years. While month-on-month inflation increased to double-digit figures from June 2022, tight fiscal and monetary policies announced in June 2022 brought some semblance of stability into the market as exchange rate volatility, which is a key source of inflationary pressure in Zimbabwe, has decreased, compared with the pre-July 2022 period.

“30% increase in turnover was recorded in the year under review, from ZWL$38.5billion in the prior year to ZWL$50.1billion. The improvement was largely attributable to strong demand for all the Group’s products during the year under review.

“However, the Group’s operating profit shrunk by 93%, from ZWL$5.0billion in the prior year to ZWL$0.4billion.

“The lower operating profit was a direct result of increases in raw sugar prices and operating costs in real terms. Increasing global inflationary pressures have resulted in a spike in the costs of imported chemicals, packaging and refinery spares,” he said.

GSS, however, recorded a 317% revenue increase compared to the previous year from ZWL$10.2billion recorded in the prior year to ZWL$42.5billion, while operating profit increased by 34%, from ZWL$1.7billion to ZWL$2.3billion.

Dr Mbire reviewed that the GSS plant continued to be certified by The Coca Cola Company and maintained its Food Safety Certification under the FSSC 22000 series.

These certifications enable the Group to supply sugar to TCCC franchisees in the Southern African region and beyond.