Malawi sweetens Illovo Sugar Group profit
Malawi is the biggest contributor to Illovo Sugar Group’s operating profits out of the six African countries that the company operates in.
According to the group’s 2011 annual report, Malawi contributed 39 percent to the overall operating profits while Zambia came second with 33 percent followed by Tanzania with 11 percent. South Africa contributed seven percent while Swaziland and Mozambique contributed six and four percent, respectively.
The group made a 16 percent operating profit of R1 349 million (K45 866 billion) in the year.
In terms of production quantity, the report indicated that Illovo Malawi’s output of 283 000 tonnes came third from South Africa which produced 441 000 tonnes and Zambia 374 000 tonnes. Swaziland had 224 000 tonnes, Tanzania 113 000 tonnes and Mozambique 91 000 tonnes.
“The strength of Illovo’s business model lies in its ability to efficiently supply domestic markets in the countries in which the Illovo Group operates, comprising 64 percent of sugar sales in 2011/12. Through our marketing and distribution expertise, we are also able to deliver sugar to European refiners as well as finished pre-packed speciality sugar to other overseas markets.
“In aspiring to be the supplier of choice, Illovo has also become a regular supplier of sugar to neighbouring regional markets, comprising eight percent of total sales in 2011/12. In Malawi, a new sugar distribution system has brought tangible results in our efforts to supply sugar on a country-wide basis at a uniform price,” reads the report from the JSE Limited listed company, a subsidiary of Associated British Food plc which holds 51 percent of issued share capital.
Illovo Sugar Malawi country director Pat Mitchell attributed the contribution to good integration between agriculture and the mills, among other things.
“Malawi has a proud record of being a significant contributor to Illovo Group results. The success of the business comes down to good integration between agriculture and mill. Illovo owns the majority of the cane that is delivered to the mills and as such takes the full value of the crop as well as profits from the milling operation,” said Mitchell.
Mitchell cited forex and fuel shortages as the greatest challenges Illovo Malawi faced last year.
He said fuel shortages also delayed some of their exports, resulting in slow delivery to customers.
The company also struggled to deal with sugar shortage early this year.
