Illovo Sugar reports 11% profit decline in H1 2024

MALAWI – Illovo Sugar Ltd, a leading sugar producer in Malawi, has reported an 11 percent decline in profits for the first half of 2024, bringing the total to K22 billion (US$12.69M) compared to the same period last year.  

Despite an increase in revenue by K22 billion (US$12.69M) to K139 billion (US$80.2M), the company’s operating profit plunged to K29 billion (US$16.73M), down by K20 billion (US$1.5M) from the previous year. 

Announcing the results, Illovo Finance Director Kondwani Msimuko highlighted several challenges affecting the company’s performance.  

These included the impact of national disasters such as Cyclone Freddy on the cane fields, issues with the Malawi foreign currency, and theft of irrigation equipment and sugarcanes by surrounding communities. 

The company’s net cash holdings have increased significantly to K54 billion (US$31.15M), up by K44 billion (US$25.39M), while foreign payables have risen to K90 billion (US$51.9M), up by K63 billion (US$36.3M).  

Illovo attributed this rise in foreign payables to a scarcity of foreign exchange, which has led to an increase in Malawi Kwacha cash balances. This strategy aims to ensure the group’s financial sustainability and operational stability until the foreign currency liquidity improves.  

By carefully managing resources and expenditures, Illovo intends to navigate the current economic challenges and position itself for long-term success once the foreign exchange situation stabilizes. 

Msimuko also mentioned that efforts are underway to enrich the soils of the company’s cane fields affected by Cyclone Freddy.  

Additionally, Illovo has embarked on initiatives to influence traders to sell sugar at recommended prices. These initiatives include converting shipping containers into distribution centers targeting rural areas and providing door-to-door sugar deliveries to traders. 

Illovo has also made significant investments in community projects, spending K2.106 billion (US$1.2M) in various areas: education, economic empowerment, infrastructure, natural disasters, potable water, and other projects. 

Furthermore, Illovo’s contribution to the Malawi University of Science & Technology Endowment Trust has reached K400 million (US$230,777.72), following an initial payment of K150 million (US$86,541.64 ) aimed at supporting female students in science, technology, engineering, and mathematics (STEM). 

Illovo Sugar Ltd operates two sugar estates and has grown to become one of the largest sugar producers in Malawi.  

The company works closely with local stakeholders to promote sustainable farming practices and ensure fair trade. With a strong track record of financial performance and a commitment to sustainability, Illovo Sugar Ltd is a critical player in Malawi’s sugar industry. 

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