Illovo Sugar Ltd reports 15% revenue growth despite 32% profit decline for 2024
MALAWI – Illovo Sugar Ltd has announced a 15% revenue increase to K313.7 billion for the financial year ending August 31, 2024, up from K262.5 billion (US$150.09M) the previous year.
Despite this growth, the company’s pre-tax profit dropped by 32% to K55.95 billion (US$31.99M), reflecting challenges faced across its operations.
The agricultural sector, particularly at Nchalo Estate, encountered significant wet conditions and cane theft by surrounding communities, alongside irrigation equipment losses, which hampered performance.
Nevertheless, the company maintained a sufficient cane supply to support sugar production.
Production capacity faced setbacks between December 2023 and April 2024, as foreign currency shortages delayed essential spare parts and contractor services for off-crop maintenance.
At Dwangwa, processing muddy cane further reduced plant reliability, contributing to a decline in combined sugar output from 264,119 tons in the prior year to 222,190 tons in 2024.
According to company statement, continuous improvement initiatives are now underway to enhance factory performance.
External pressures compounded these issues, with the Kwacha’s 44% devaluation driving up costs and eroding profitability.
The introduction of a 40% tax band on taxable income above K10 billion (US$5.7M) has also strained cash flow, while intermittent power supply from EGENCO, high inflation, rising interest rates, and limited foreign currency availability continue to challenge operations.
Adverse climate patterns further threaten sustainability, prompting Illovo to invest in resilience measures.
Looking ahead, the company is focusing on agricultural recovery and yield improvement programs, alongside factory optimization and staff development.
A key initiative includes investment in irrigation infrastructure at Nchalo under the Shire Valley Transformation Project to bolster long-term agricultural output. Climate resilience efforts are also being prioritized to mitigate future weather-related disruptions.
Through its Business Enablement Program, Illovo aims to optimize technology, enhance staff skills, and align growth strategies for sustained progress.
Despite the difficulties, Illovo remains optimistic about its financial outlook. The group projects a profit after tax of between K25.3 billion and K28.7 billion for the six-month period ending February 28, 2025, marking a 13% to 28% increase from the previous period’s K22.4 billion.
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