Illovo Sugar (Malawi) plc says it expects its after-tax profit for the year ended August 31 2021 to jump 702 percent to about K22 billion from K2.74 billion achieved during the corresponding period last year.
In a written response yesterday to justify the profit jump, Illovo Sugar (Malawi) plc managing director Lekani Katandula attributed the expected feat to a reduction in illegal imports and improvement in world sugar prices.
He said the current results are also in the context of the performance of the company in the last three years.
Said Katandula: “Our August 2018 profit was K16.4 billion. It then dropped to K10 billion in August 2019 before dropping further to K2.7 billion on account of an influx in illegal imports and falling world sugar prices which impacted our export earnings adversely.
“In the current year, we have experienced lower illegal imports and a strong improvement in world sugar prices which have boosted our export earnings and opportunities.”
He said the Malawi Stock Exchange-listed sugar manufacturer is also benefitting from its continued journey to transform its business by becoming more efficient.
“In 2013, our post-tax profit was K20.9 billion, which in real terms is much higher than what we project to achieve this year,” said Katandula.
Commenting on the profit jump, Minority Shareholders Association secretary general Frank Harawa described the development as positive, saying shareholders are upbeat that they will get better dividends.
He said: “We saw Illovo paying a K4 dividend from their half-year earnings which were about K6.1 billion and we are thus expecting more in terms of dividend.
“We are also expecting the company to lower its loans because due to the servicing costs, this has previously affected dividends.”
On his part, Consumers Association of Malawi executive director John Kapito while describing this as good news for the company and the economy, observed that the development speaks volumes on the unrealistic pricing of its product on the local market.
He said: “A jump from K2 billion to K22 billion is certainly questionable and tells a sad story of how Malawians are being exploited.
“While an average Malawian cannot afford a packet of sugar, it is really sad to note that one of the few companies with a big market share in the country is making such hefty profits.
“We would like to see the company lowering the price of sugar to make it affordable.”
In the half-year period ended February 28 2021, Illovo posted a K6.1 billion profit and resolved to pay an interim dividend of K2.9 billion in respect of the half-year results.
According to extracts of a financial statement for the six months period ended February 28 2021, Illovo board of directors resolved to pay dividend, which represented K4 per share after a four-year drought.
The company annually cultivates around 1.8 million tonnes of cane which together with approximately 350 000 tonnes produced by smallholder farmers, results in the production of about 250 000 tonnes of sugar.