Starafrica eyes 10% increase in exports

Published: 28 September 2019
After concluding an agreement with ZETDC last month to ensure continuous power supply to the factory, Starafrica Corporation intends to recover 10% of production lost by accelerating export sales in the regional market.
The company has already started exporting granulated sugar and Country Choice Foods products to regional markets and it is expecting an acceleration of volumes in this market segment. In addition to markets in Botswana and South Africa, the sugar producer has made headway in activating sales in new territories like Democratic Republic of Congo (DRC).
Chief executive officer Regis Mutyiri said efforts to drive deeper into these and other markets will continue for the rest of the year.
"It takes time to develop export markets, so as time goes on we should be able to do 20% but by year end we are aiming for 10%. We have also sent some enquiries to Tanzania and Kenya. It will take time but by next year, we will be able to export to these countries," he said.
To date, the exported tonnage into the region stands at +/- 700 tonnes while FY18 was 1 900 tonnes.

In the five months to August 2019, sales volumes of Goldstar Sugars suffered from product shortages following prolonged power outages in July which curtailed production. However, volumes were ahead of the comparative period last year up to June 2019.
"The loss of sales experienced in July and part of August 2019 due to power outages, reversed the headway made by the group and reduced the period's performance to 90% of the comparative period last year. Power supply to the plant has improved significantly upon the conclusion of an agreement with ZETDC in August 2019," he said, adding that this had enabled the company to close the gap in order to achieve budget.
Under the agreement, the company is paying the bills at higher rates in local currency and has got a dedicated line that is supposed to be shielded from the load shedding.
Sales volumes of Country Choice foods were negatively impacted by continuous shrinking of disposable incomes and preference for basic consumer products during the period under review.
"Uptake from bakers and confectioners slowed down as these customers were suffering from insufficient raw materials like flour and reduced production levels due to power outages experienced in July 2019," he said.
GSSH and Country Choice Foods have continued to trade profitably despite the ongoing challenges of high input costs. "Performance continues to increase against limited latitude to fully recover the same through price adjustments thereby putting pressure on margins.
Mutyiri said the pursuit of new products continues. However, the focus is currently directed at exports whose inflows will be critical for accelerated new product development. In order to deliver the budgeted volumes, he said, the firm will continue to innovate in light of increasing prices.
To mitigate the impact of increases in the cost of raw material, manpower costs and other inputs, management has employed measures which include termination of contracts for some roles deemed redundant or excess to current and forecast requirements and the introduction of special collection prices for some customers.
Updating on the balance sheet restructuring, Mutyiri said, discussions are ongoing with the remaining scheme creditors with a view to having outstanding scheme of arrangement debts addressed before the expiry of the secondary scheme of arrangement in 2022. At as the end year ended March 2019, about 72% of creditors had exercised their conversion option.

As the local market continues to be challenging, the firm anticipates positive outcomes from the cost containment measures that have been implemented which will keep the firm profitable.
The upgraded plant in Harare had helped increase Starafrica's market share to 80% in the industrial white sugar business while retail sugar remained at 20%.
Starafrica Corporation posted a profit after tax of ZWL$8.8 million in the year ended March 31, 2019 from a loss after tax of ZWL$3.8 million recorded in 2018 due to an increase in volumes and cost management strategies.
At the AGM directors fees and auditors remuneration were approved at ZWL$139 100 and ZWL$136 000 respectively.
- finx
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