Triangle retrenches as economy bites

Sugar producer Triangle Limited has announced a phased retrenchment program, with the first group of employees set to leave by the end of next month, citing a tough operating environment.

In a statement released yesterday, Triangle outlined that the phased approach was designed to manage the transition with the utmost sensitivity and care, with the entire process expected to be completed by the end of August 2025.

Although the company did not disclose the exact number of employees to be affected, it attributed the decision to escalating operational costs, including fertiliser, fuel, maintenance, and imported goods and services, as well as inflationary pressures and currency losses.

"The inability to claim VAT [Valued Added Tax] on inputs after sugar was exempted from VAT, combined with competition from low-cost duty-free imported sugar, have severely impacted our ability to sustain current levels of operation," the company said.

Triangle noted that since 2022, profit margins had declined significantly by 55%, manpower costs had increased by 133% as a proportion of revenue, and debt levels had risen to unsustainable levels.

"The company has been unable to generate positive cash flows from its operating activities for the past three years and has faced a very constrained working capital position since the implementation of the revised cane supply arrangements, which has necessitated constant trade-off between what the business needs and what it can afford," the statement added.

The firm highlighted that despite addressing the declining trend in sugar production, the cost of producing sugar remained significantly higher than regional benchmarks.

Triangle is currently engaged in ongoing discussions with stakeholders regarding the division of proceeds among farmers and millers, alongside continued pressure for adjustments to wage agreements, which may further strain its financial outlook.

"Despite implementing numerous cost-reduction and revenue-enhancement initiatives, these efforts have proven insufficient to stabilise the business. This decision has been taken to protect the long-term sustainability of our organisation and ensure that Triangle Limited continues to play its vital role in Zimbabwe's economy and the livelihoods of communities in the Lowveld region," Triangle said.

The company assured stakeholders that the retrenchment decision is solely based on local economic and operational challenges and is not linked to the business rescue process of the company's shareholder in South Africa or the acquisition of the business by the Vision Consortium.