Malawi) plc has reported a jump in profit to K8.1 billion in the six months ended February 28 2019 from K7 billion despite a drop in revenue.
Extracts from unaudited financial statements published yesterday show that revenue for the Malawi Stock Exchange (MSE)-listed sugar manufacturer dropped by K3.8 billion to K62.4 billion from K66.2 billion during the same period last year.
Illovo Sugar (Malawi) plc has cited challenging market conditions with illegal sugar imports topping the list.
“Consequently, the illegal sugar imports had a negative impact on domestic sales volumes and ultimately impacting the group’s cash flow.
“Export sugar sales continued to be under pressure due to the continued low world market price, logistical challenges and increased transport costs,” reads the statement jointly signed by Illovo Sugar (Malawi) plc managing director Mark Bainbridge and board chairperson Gavin Dalgleish.
The firm’s operating profit remained flat at just over K14.3 billion from K14.2 billion, affected by electricity tariff hikes during the period.
In the medium to long-term, Illovo Sugar (Malawi) plc says it sees increased local competition and the influx of illegal imports putting pressure on domestic sales over the next six months.
Illovo said with management’s prioritisation and focus on debt reduction, repayment of the foreign currency denominated liabilities coupled with the relative stability of the kwacha, net finance costs for the six months reflected a decrease of K1.7 billion over the comparable period.
“The interplay of inflation, exchange and interest rate movements and the debt levels of the company will continue to have a marked effect on overall business profitability,” reads the statement.