By Jeff Kapembwa
Cane production at Zambia Sugar Plc, dwarfed by 23 percent as revenue growth at the sweetening company rose, a company spokesperson said in an advertised statement.
Zambia Sugar, majority owned by South Africa’s Illovo Sugar Africa, faced a decline of cane output, by 23 percent to ZMK1, 987 million from a year earlier earning of K2, 567 million compounded by inflationary pressures on key outputs including electricity, fertilisers, chemicals, packaging, fuel and employee costs which raised operating expenses.
The drought, Harriet Kapekele-Katongo, the company secretary said, had resulted in crippling power shortages in the country with availability reduced to as little as three-hours per day.
The can yields suffered because of the heightened drought of 2023/24 farming season which occurred during the company’s peak growth period for the crop.
Consequently, both quantity of the cane harvested and sugar production declined, it says in its financial year report ending 31 August 2025.
To safeguard agricultural and factory operations, the business secured foreign currency denominated premium to import power through its Power Supply Agreement with power utility, Zesco.
“While critical to sustaining operations, the premium power rate per kilowatt hour was 67 percent higher than the pre-drought rate resulting in approximately K100 million of unbudgeted expenditure” she said.
Total revenue increased by 18 percent, rising from K7, 530 million to K8, 897 million, a growth driven by a 23 percent increase in domestic revenue and a 9% improvement in export realization, reflecting enhanced value capture and sales mix optimization across both market segments.
However, finance costs rose to K117 million from an earlier K38.7 million recorded a year earlier on account of increased interest expense associated with working capital facilities, less arrangements and statutory obligations.
Interest coverage remains sound at 17 albeit lower than the prior year’s 663.
The business expanded in investment in core capital projects and secured a K700 million three-year loan to support working capital and climate resilience initiatives, which is expected to stimulate broader economic activity through enhanced activity across the value chain.
The drought-induced decline in profitability led to a 48 percent reduction in income tax expense which reduced from K451 million in the prior year to K233 million in the current period. Profit after tax decreased to K1, 634 million from K2, 058 million a year earlier.
Because of the drought-induced reduction in profitability and increase in capital expenditure funded internally, the Board of directors proposed a dividend of 109.6 ngwee per share compared to 161 ngwee per share in the prior year.
This is to be considered for approval by shareholders at the Annual General Meeting scheduled for 27 November 2025.