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ZAMBIA Sugar Plc says sugar production for 2014 is expected not to exceed that of the previous year due to late season cane yields resulting from irrigation constraints.
The company also says regional pricing pressures are projected to continue, resulting in a strain on operating margins.
However, management has pledge to continue focusing on costs to mitigate the impact on profits for the full year.
This is according to the Zambia Sugar Plc financialresults as at September 30, 2013.
“Sugar production for the full year is not expected to exceed that of the previous year due to late season cane yields being lower than previously anticipated.
The financial impact of this yield drop, to an extent is attributable to irrigation constraints resulting from failure of the 30 megawatts turbo alternator set in 2012/2013,” it says.
Zambia Sugar says the reduced water supply following failure of the turbo alternator set the previous year has resulted in lower cane yields yearon- year.
On the positive front, the company says water supply to the crop in the current season has been satisfactory given stable power supply and is expected to benefit yields in the 2014/2015 season.
Meanwhile, the company’s total revenue for the half-year increased by 12 percent to K916 million as a result of higher sales volumes.
However, Zambia Sugar says profit from operations remained unchanged as a result of a material decline in export prices and increased costs, which have impacted negatively on the operating margin.
The company says net finance costs have continued to decrease following ongoing repayment of the expansion related loan.
According to data, the company’s total sugar production increased by 9 percent to 327 tonnes while refined output increased by 22 percent to 37,000 tonnes within the review period.
It says the re-commissioning of the 30 MW alternator set has stabilised power supply to the mill, thereby improving production efficiencies.
The company has noted that the domestic market has performed reasonably well on the back of sound economic fundamentals.
It says though demand in the industrial sugar sector started on a weak note, it has stabilised and is expected to meet expectations in future.
On the other hand, regional markets returns have been dampened by lower world market prices of sugar.
“The situation has been further aggravated by an extension of import duty waivers in some markets,” Zambia Sugar says.
