Starafrica Corporation Reports 30% Revenue Increase Driven by Price Adjustments

by Oluwatosin Alabi

Starafrica Corporation, a prominent sugar refinery in Zimbabwe, has reported a significant surge in group revenue, recording a 30% increase to $50.1 billion for the full year ending on March 31, 2023. This remarkable growth was primarily attributed to price adjustments, as the company’s sales volumes remained relatively unchanged during the same period.

Starafrica Corporation operates under two well-established brand names, Goldstar Sugar and Country Choice Foods, and is supported by subsidiary companies, Starafrica Operations (Private) Limited and Silver Star Properties (Private) Limited, which manages various commercial, manufacturing, and residential premises across Zimbabwe.

Dr. Rungano Mbire, the chairman of the group, acknowledged this substantial increase in revenue but highlighted that the group’s operating profit saw a sharp decline of 93%, falling from $5 billion in the previous year to $0.4 billion. He explained that this decline was primarily due to rising raw sugar prices and operational costs in real terms, further exacerbated by global inflationary pressures impacting the costs of imported chemicals, packaging, and refinery spares.

In a historical context, the revenue surged by an impressive 317%, rising from $10.2 billion in the previous year to $42.5 billion, while operating profit showed a more modest increase of 26% to reach $2.2 billion, compared to $1.7 billion the previous year.

During the same period, sales of granulated sugar produced at Goldstar Sugars (GSS) remained stagnant, with 82,321 metric tonnes sold, similar to the previous year’s figure of 82,500 metric tonnes. Dr. Mbire attributed this stability to competitive pressures from imports following the promulgation of Statutory Instrument 98 of 2022. The Ministry of Finance and Economic Development later suspended duty on sugar imports into the country.

However, Dr. Mbire also noted that production had faced challenges, including raw sugar stockouts and power outages, resulting in a 6% reduction in production volumes from 82,399 metric tonnes in the previous year to 77,270 metric tonnes during the review year.

Despite these challenges, Starafrica Corporation remains committed to enhancing its plant availability and throughput by investing in critical plant and machinery upgrades. The company also maintains certifications from The Coca-Cola Company (TCCC) and Food Safety Certification under the FSSC 22000 series, enabling it to supply sugar to TCCC franchisees across Southern Africa and beyond.

At Country Choice Foods (CCF), competitive pricing has helped the unit’s products maintain a strong presence in the market. Sales volumes increased by 9%, rising from 1,879 metric tonnes in the previous year to 2,048 metric tonnes. The growth in sales was supported by improved production of sugar specialties, which increased from 1,920 metric tonnes to 2,140 metric tonnes during the review year.

Dr. Mbire emphasized that the procurement and commissioning of automatic syrup filling and icing packing machines have played a crucial role in boosting production at the unit. Additionally, new products, including drinking chocolate, powdered mahewu, baking powder, cocoa powder, and baking raisins, were introduced into the market.

The group’s property business also showed promising results, with rental income increasing significantly to $337.5 million compared to $162.2 million in the previous year. Dr. Mbire attributed this improvement to the waning impact of the Covid-19 pandemic, which had negatively affected tenants’ ability to generate income and meet their rental obligations.

Furthermore, the associate company Tongaat Hulett Botswana reported a profit of $958.1 million, with the group’s share amounting to $319.4 million after converting earnings to Zimbabwean dollars at the Reserve Bank of Zimbabwe auction exchange rate as of March 31, 2023.

Starafrica Corporation’s financial results demonstrate both resilience and growth, despite the challenges faced during the review period. The company’s commitment to product diversification, competitive pricing, and infrastructure improvements bodes well for its continued success in the Zimbabwean market and beyond.

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