Zimbabwe sugar giant clinches Coca-Cola deal

THE aggressively rebounding sugar manufacturing conglomerate, starafrica corporation Limited, says it plans to scale up its African ambition after clinching a landmark deal to export into The Coca-Cola Company (TCCC)'s extensive regional network, in a dramatic turn for the firm that had struggled to expunge heavy debts.

The transaction, announced by chairman Joe Mutizwa on Friday, gives starafrica impetus to execute a strategy to mount fresh forays into the African market, establish a broader footprint, grow its topline and build a bigger foreign-currency denominated war chest.

Announcing the Coca-Cola deal in a commentary to starafrica's results for the year ended March 31, 2021, Mutizwa said the transaction will be at the heart of the firm's 2022 growth strategy, as he repositions the Zimbabwe stock Exchange-listed group to shake off remnants of a difficult past.

starafrica's sugar interests are executed through Goldstar sugars Harare (GssH), which saw output fall by 9% to 59 571 tonnes during the period after a three week shutdown caused by a Covid-19 incident last year, which was followed by a fire incident.

"A comprehensive capital investment strategy and equipment maintenance plan are now in place and will be implemented at an accelerated pace now that the business has returned to viability," Mutizwa said.

"This will have a positive impact on plant availability which will improve productivity and profitability in the ensuing year.

"The plant continued to be certified by The Coca-Cola Company...Post year-end, GssH was also given full authorisation by TCCC for bottler ingredient supply to the whole of Africa.

"This will open new markets for GssH and pave way for sugar specialty products to be exported into the region and beyond," Mutizwa disclosed.

"Focus will be directed at growing the company's footprint in the region and beyond in the ensuing financial year by tapping into the export market buoyed by improved production quantities and the TCCC authorisation to supply bottler ingredients to TCCC's entire Africa operating unit.

"The group envisages a resumption of exports to the Botswana market in the 2022 financial year which will increase revenue and foreign currency earnings," Mutizwa added.

starafrica lifted inflation-adjusted revenue by 23% to $5 billion during the period, a marked rise from $4,1 billion during the comparable period in 2020.

But a downward adjustment in the fair value on investment properties and a $163 million monetary loss triggered by the depreciation of the value of the group's monetary assets saw its post-tax profit decline to $109 million during the review period, from $185,9 million during the comparable period in 2020.

While Covid-19-induced write-downs held back profits growth, Friday's financial announcement demonstrated starafrica's resolve to clear growth-inhibiting debts that saw the firm being placed under a secondary scheme of arrangement with a focus to clean up its balance sheet.

Almost all debts under the scheme have been cleared.

"The secondary scheme of Arrangement, whose tenure expires in February 2022, remains in place with 99,8% of creditors having been settled leaving an amount of $1,3 million in liabilities under the scheme as at the end of the year under review with $654 451 of the balance having been settled immediately after year end," Mutizwa said.

"The group continues with efforts to trace the whereabouts of the few remaining local scheme creditors with a view to clearing the small amounts outstanding within the timeframe of the scheme. All outstanding foreign liabilities have been paid."