RESCORP REPORTS 8% DIP IN INTERIM PROFITS

MBABANE – The Royal Eswatini Sugar Corporation (RESCorp) has reported an 8 per cent decrease in total comprehensive income for the six months ended September 30, 2024, amounting to E658 million.

The decline is primarily attributed to a delayed start of the current crushing season, which impacted overall cash generation and production volumes. RESCorp faced challenges during the first half of the financial year due to rains in April 2024, which delayed the start of the crushing season by two weeks. As a result, the total cane crushed for the period was 2.4 million tonnes, marking a 4 per cent decline compared to the same period last year. Despite these setbacks, improved sugar recovery processes helped limit the drop in sugar production to just 1 per cent, with output reaching 319 182 tonnes of 96° pol sugar.

Notably, sucrose yields from estate cane showed a slight improvement, reaching 12.51 tonnes sucrose per hectare (ts/ha) compared to 12.39 ts/ha in the previous year. This reflects better cane quality, mitigating the negative impact of storm damage in March 2024. Ethanol production fell 8 per cent to 18.7 million litres due to storage constraints caused by slower sales. Ethanol sales were 24 per cent lower at 11.8 million litres. Despite this shortfall, RESCorp anticipates a rebound by the end of the marketing year due to new contracts now in place.

Moderated

Turnover increased by 3 per cent, driven by higher prices for sugar and ethanol, though lower production volumes moderated these gains. The cost of sales rose by 1 per cent due to inflationary pressures, offset partially by reduced production volumes. RESCorp’s financial position remains robust, with total assets amounting to E5.9 billion. The company’s strategic initiatives include the installation of a 10 Megawatt Solar Photovoltaic plant, the development of 521 hectares of new cane land and ongoing efficiency and research projects, including a liquor bottling venture.

On its outlook, the company expects sugar production for the current year to be about 8 per cent higher than the previous year. However, increases in sugar and ethanol prices are projected to trail general cost inflation. Additionally, the prior year’s results benefited from a significant deferred tax liability release due to a reduction in corporate tax rates. As a result, the full-year financial results for March 31, 2025, are expected to be significantly lower than the previous year. RESCorp remains committed to best corporate governance practices, guided by the King IV code. During the interim period, auditors SNG Grant Thornton conducted a review and issued an unmodified report.

Declared

A first interim dividend of 129.20 cents per share (dividend 65) was declared on September 13, 2024, and paid in November 2024 to shareholders registered as of October 18, 2024.
It is worth noting that for the financial year ended March 31, 2024, the company realised total comprehensive amounting to E641.8 million. This is the total comprehensive income attributable to the owners of the company. The company reported that this was 259 per cent higher than the result achieved in 2022/23. RESCorp Managing Director (MD), Nick Jackson, has described the last financial year ended March 2024, as their best year ever.He said during this period the company recorded at over E600 million profits after tax. “It was indeed a good financial year,” he said.

Benefitted

The MD said, however, what helped them last year may not help this year. He explained that things like the higher global sugar prices and high foreign exchange rates contributed to the company’s improved profits. RESCorp benefitted from a buoyant world sugar price, the Lilangeni being weaker against both the USD and the Euro, and also from the delinking of SACU price increases from RSA general CPI. A correсtive SACU price increase of 14 per cent was therefore affected mid-way through the financial year. He stated that climate change has been a very big challenge for the company. He said they are looking at ways to address this challenge in order to progress as a company despite this challenge.RESCorp further reported that the increase in the fair value of standing cane was E350.6 million higher than the prior year, reflecting the increase in expected sucrose volumes in 2024/25 after re-aligning the harvest season, as alluded to above, and the higher sugar prices used in the valuation.

Acquisition

The company further reported that share of profit of equity accounted investees increased by 162 per cent with the acquisition of the 35 per cent interest in Enviro Applied Products (Pty) Limited being consolidated for a full year against one month in the prior year and a much improved performance by Mananga Sugar Packers (Pty) Limited. Cash generated from operating activities at E657.5 million was 70 per cent higher than for the comparative period, bolstered by the higher sugar and ethanol prices, a stronger working capital position, and reduced cash burn typically experienced when harvesting under wet conditions as in 2022/23. As conveyed in the outlook expressed in the comparative reporting period, the Group paused its expansion programme to allow for strengthening of its cash position.

Over the past 14 years, RESCorp has managed to generate profits to the tune of E7.518 billion.  These stats were shared by the RESCorp MD Nick Jackson during the Mbabane Alliance Church Business Seminar held in July. Jackson shared that the business has grown leaps and bounds since inception in 1977. He highlighted that the company merged with Mhlume Sugar Company in 2001 and it currently employs 1 850 permanent and 2 500 seasonal and casual employees (99.6 per cent local).

Dividends

The MD shared that since 2010, the company has paid a total of E4.714 billion dividends of which E2.94 billion was paid to local shareholders. It is worth noting that the company’s ownership is structured in manner that, Tibiyo TakaNgwane owns 63 per cent, RCL Foods owns 29 per cent, 10 per cent shares belong to the Government of Nigeria, 6 per cent owned by the Government of Eswatini and 2 per cent is owned by others not specified. Most recently, the company remitted taxes to the government to the tune of E600 million. The company further provided healthcare services to the tune of E28 million. The MD further revealed that the company has been able to secure new markets in Kenya, Zimbabwe, Rwanda, Tanzania and DRC.

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