• Mon. Apr 15th, 2024

Goldstar shuts refinery operations over an increase in raw sugar prices

ByEconomic Times

Feb 15, 2023

…engages top supplier to find lasting solution

Goldstar, the country’s largest sugar producer, temporarily closed its refinery and sent employees on indefinite leave owing to a rise in raw sugar prices, a situation that made it difficult to continue operations.

The company closed its Harare refinery at the beginning of this week.

“We are writing to advise that we have closed the Goldstar Sugars Harare Refinery with effect from Monday, 13 February 2023 until further notice,” Goldstar Sugars commercial executive Revesai Gwenhamo said in a statement this week.

“The closure is a result of a raw sugar price increase taken by our supplier on 9 February 2023, which makes it difficult for the company to produce and sell refined sugar at a competitive and viable price as well as onerous trading terms which have constrained raw sugar supplies to the Refinery.”

However, Gwenhamo said that they had consulted with suppliers about a course of action.

“We have engaged the supplier and look forward to finding an amicable solution to enable us to resume operations as soon as possible. We will keep you informed of progress on the matter,” he said.

Gold Star is a subsidiary of Zimbabwe Stock Exchange-listed firm Starafrica.

In its half-year ended September 30, 2022, StarAfrica reported an inflation-adjusted profit after tax decline of 173%, resulting in a loss of $133.5 million. Operating profits fell by 57% to $868.8 million, while gross profits increased by 15% to $4.1 billion.

According to the company, the declining profits were largely attributable to rising real prices of raw sugar and key imported manufacturing inputs (chemicals, packaging and refinery spares).

Consequently, the company’s gross profit margin declined to 19% from 24%, and its operating profit margin fell to 4% from 14%.

 Revenues increased by 40% to $20.1 billion, which the group attributed to strong demand.

During the period, Goldstar sugar sales volumes increased by 5% to 41,155 tonnes, however production volumes were down by 6% to 37,975 tonnes due to high plant downtime as power outages and machine breakdowns affected operations.

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The Country Choice Foods segment saw its sales volumes increase by 28% as increased plant efficiencies supported improved production. The unit also launched new products during the period – caramel popcorn, baking and cocoa powders.

The group’s properties business saw its rental income rise to $100.19 million from $47.8 million as post covid occupancies and collections recovered.

Associate company Tongaat Hulett Botswana recorded a profit equivalent to $393.5 million, of which StarAfrica’s share was $131.2 million.

The company’s operations generated cash flows of ZWL$831 million, down 8% from the 2021 comparative. Capital expenditures of $311 million were reported for the period, with the group outlining its aims to continue investing in the refurbishment and replacement of PPE to improve production efficiency – with an emphasis on improving both quality and quantity of output.

In its outlook, the company said it will aim to tighten its cost management in both the refinery and specialty operations. It also urged the government to reinstate the duty on imported sugar – Harare

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