Illovo subsidiary and Lusaka Securities Exchange – LuSE listed Zambia Sugar Plc (ISIN: – ZM0000000052) recorded a 68% rally in its H1:19 (to 29 February 2019) headline earnings to K30.44 million. This was established in the company’s financial report published on the Zambian bourse website.
Revenues rose 14.22% to K1.22 billion from K1.07 billion same period a year ago on increased uptake of cane sugar given the exemplary quality.
Cane quality and supply observed over the last (3) years is attributed to improved irrigation and water supply in the Nakambala area manifesting in a 13.33% rally to 400,000 metric ton harvest levels in the 2018/2019 season. Rising demand for Illovo sugar continues to keep the company in business despite the widening sugar surplus globally that has suppressed international prices. Brazil remains a key driver and determinant of international sugar given its significant cake of global production.
Operating profits for the half year period to 29 February rose 26.66% to K190.0 million from K150.22 million in a comparative prior period as Finance costs exacerbated by rising interest rates weighed profit margins.
SECOND HALF FORECAST
Sugar production is expected to remain bullish and surpassing the H1 levels seen but uncertainty in the business environment from vague taxation policy could impact the operations of the sugar giant. Zambia is unlikely to implement general sales tax on the 01 July given the formalities the GST – bill has to pass through before actualizing to law. This shift is however likely to weigh on business planning for Zambia Sugar alongside other corporates.