Sugar producer, Goldstar Sugars witnessed a 9.4% decrease in production in the 9 months to December 2020 when compared with the prior year comparable period as a result of critical power and water outages and COVID-19 which negatively affected production.
This happened at a time when Zimbabwe’s 2020 economy is estimated to contract by -10% with the local currency losing value.
StarAfrica Corporation Limited; Company Secretary Aldo Musemburi says “The company operated in an economic environment characterised by increasing hyperinflationary pressures, intermittent power outages and pervasive liquidity challenges which significantly affected the company’s production operations.”
“Although the quarter experienced some easing of the Covid-19 induced lockdown restrictions in the operating market, consumer spending remained significantly constrained due to low disposable incomes.”
Zimbabwe in 2020 witnessed inflation rising to over 800% with prices of goods in local currency going up.
Musemburi says, “The inflationary pressures have put significant pressures on the company from suppliers and customers alike.”
“The rising costs of production mainly as a result of increases in plant maintenance costs have not been transferrable to customers as pressures rose on the company to reduce prices in the face of threats of imported sugar.”
Analysts have blamed the rising of prices that took place in 2020 on speculative pricing tendencies.
The Goldstar Sugars brand owner StarAfrica Corporation Limited (StarAfrica) property business also faced challenges with lower rental collections than the prior comparable period as tenants’ ability to meet their lease obligations has been affected by the adverse effects of the Covid-19 pandemic on the economy.
“In order to stay competitive and in the spirit of mutual beneficiation, the company effected a 15% decrease in manufacturer and bottler-grade sugar prices in December 2020 for its customers and, in turn, also negotiated some decreases in supplier costs with some of its main suppliers,” Musemburi says.
“Country Choice Foods has made significant traction in product development and market growth as sales have increased by 24% for the 9 months to December 2020 from the prior year comparable period.”