Zambia Sugar in 22% Sales Drop

ZAMBIA Sugar Company says the worsening economic environment in the country characterised by lack of money has decreased sugar sales by 22 per cent.
According to an interim report for the six months ending September 30, 2016, Zambia Sugar stated that its sales declined by 22 per cent, triggered by dwindling household incomes and challenging economic conditions.
Zambia’s macroeconomic environment has drastically deteriorated between the 2015 and 2016 financial year, mainly on account of the Bank of Zambia’s tightened monetary policy position.
“The half year has been characterised by a challenging domestic market, and the strong currency has put pressure on export proceeds and cash flow. Total sugar sales in the first six months were 6 per cent lower than last year. Domestic sugar sales decreased by 22 per cent relative to the prior year as a result of declining disposable income levels and challenging economic conditions,” Zambia Sugar stated.
It stated that although profits after tax for the half-year increased by 84 per cent to K17.2 million, up from K9.3 million in the prior corresponding period, the net finance costs jumped by over 123 per cent.
“Net finance costs increased by 123 per cent to K218 million due to high local interest rates and the recent increase in borrowings to fund a Product Alignment and Refinery Capital Project. Profit after taxation increased by 84 per cent, from K9 million to K17 million,” it stated.
Zambia Sugar also stated that despite increased revenue of K1 billion, up from K753 million for the corresponding prior period last year, the strengthened kwacha had negatively impacted earnings from export proceeds.
“Conversely, exports to neighbouring regional markets increased by 84 per cent relative to the same period last year although earnings have been unfavourably impacted by the strength of the kwacha,” it stated.
And the company further stated that sugar production for the full year ending March 31, 2017 is expected to be lower than the previous year due to sugar cane yields and lower sucrose levels.
“Difficult domestic market conditions and the high interest environment are also expected to continue through to March 2017 and export earnings will continue to be affected by the strong currency,” stated Zambia Sugar.