Starafrica eyes profitability

Published: 02 July 2018

Struggling sugar producer Starafricacorporation (Starafrica) is eyeing a return to profitability in the near future after reducing its losses by more $2 million.

The group's chairperson Joel Mutizwa said given the positive macro-economic outlook anticipated in the post-election era, the company is poised to deliver improved performance in the 2018 financial year.

"The company is working with key stakeholders to chart a path to sustainable growth and profitability going forward. This will be the second phase of the turnaround strategy," he said.

This was after the sugar producer, which has found the going tough in a dollarised economy, reduced its loses to $3,8 million in the year to March 31, 2018 from $5,9 million in 2017. Earnings before interest, tax, depreciation and amortisation increased from $1,6 million achieved in the previous period to $3,1 million.

Mutizwa noted that Starafrica's balance sheet improved after the conversion of $46,8 million worth of debt into equity as was provided for under the secondary scheme of arrangement with creditors which came into effect in February last year.

"The conversion represents 70 percent of the legacy debt which had the conversion option and resulted in the reversal from a net liability position of $41 million in 2017 to a net asset position of $1 million in the year under review," he said.

"The net current liability position reduced from $8,9 million in 2017 to $7,9 million in 2018 and work is in progress to restructure legacy statutory debts which form part of the current liabilities into long term."

The conversion resulted in a change of control of the company where the Zimbabwe Asset Management Company (Zamco) is now the controlling shareholder owning 58 percent of the company with the National Social Security Authority (Nssa), who were the previous controlling shareholder, holding 31 percent of the issued share capital.

In the period under review, Starafrica's unit, Goldstar Sugars, produced 63 182 tonnes of refined sugar compared with 42 624 tonnes produced in the prior year and sold 62 889 against 41 669 tonnes sold in the comparative period.

Mutizwa said the increases in production and sales volumes against prior year were 48 percent and 51 percent respectively.

"Production has also been buttressed by interventions on water supply and a general improvement in the supply of key inputs. Improved sales were achieved through concerted marketing and distribution effects which have resulted in better product footprint countrywide," he added.

- The Financial Gazette

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