Malawi contributes 43% to Illovo Group profit

Illovo Sugar (Malawi) Limited has contributed 43 percent to Illovo Sugar Group’s operating profit in the six months ended September 30 2012, according to the group’s half-year results.

Malawi is trailed by Zambia at 23 percent, South Africa 12 percent, Tanzania and Swaziland nine percent whereas Mozambique contributed four percent, the group’s results released last Thursday show.

This is the fourth year in a row Malawi has been leading in contributing to the parent company’s operating profit.

Commenting on this feat, country director for Illovo Malawi Patrick Mitchell said factory performance for the current season has improved across the group.

“The performance of the factories across the group has generally been good and, in particular, both mills in Malawi have run consistently well during the season with good recoveries of sucrose from sugarcane,” he said.

Mitchell further said strong domestic demand for sugar in both Zambia and Malawi has been facilitated by continued efforts to ensure that sugar is available throughout all regions in both countries, citing the recently-established distribution warehouse network in Malawi.

In the year to September, Illovo Malawi’s revenue went up to K30.9 billion (about $103 million), representing a 71 percent climb from K18.1 billion (about $60.3 million) while profits went up 143 percent to K9 billion (about $30 million) during the same period last year.

Overall, the group says actual operating profit for the first half mirrored an improvement of 39 percent compared to the corresponding period last year,

“A total of 10.9 million tonnes of cane was crushed in the half year, 10 percent more than last year,” says the JSE Limited listed company, a subsidiary of Associated British Food plc.

“Group cane production in the six months to September 30 2012 was much improved relative to the comparative period, the highlights being a recovery in South Africa and better performance elsewhere driven by prior year improvement programmes now delivering desired results.

“Recovery in South Africa has been pronounced following excellent rainfall received in the early season growing period, followed by further rainfall at ideal intervals to sustain good growth in the recovering crop,” reads the report.

This result was primarily driven by increased sugar production, which was 17 percent higher than in the half-year period, as well as sugar sales volumes that were nearly 10 percent higher.

The report also indicated that group sugar production for the full year is likely to be between 10 percent and 15 percent higher than the tonnage produced in the previous season.

It also stated that total cane harvested in this period from the group’s own estates reached 4.9 million tonnes compared to 4.3 million tonnes produced last year and that a new record volume of group cane production is anticipated for the full season.