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RES CORPORATION DECLARES E186M DIVIDEND

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MBABANE – The Royal Eswatini Sugar (RES) Corporation, led by Managing Director (MD) Nick Jackson, has forecasted devidends of E186 million during the financial year, which ends in March 31, 2023.

The dividend is 24 per cent lower than the previous financial year’s, citing a challenge in the performance of the company. Shareholders of Res Corporation according to the company’s official website were Tibiyo TakaNgwane (53.1 per cent), RCL Foods (29.1 per cent), Nigerian Government (10 per cent), Eswatini Government (6.5 per cent) and individuals (1.3 per cent). Res Corporation said the dividend would be paid out of current earnings. “The unaudited consolidated forecasted profit before taxation of the company and its subsidiaries for the year ending March 31, 2023,” said the company.

The sugar industry of Eswatini has in the past decade managed to export and excess of nine million metric tonne (mt) of sugar in Africa and Europe. The industry was now facing a challenge; sugar production has decreased by 5.7 per cent in the current reporting period. Sugar production was forecasted at 613 139mt in 2021/22 from an actual production of 684 563 mt in 2020/21 (a decrease of 10.4 per cent). The decline was attributed to the drop in cane production and quality, which decreased by 5.5 per cent as production for 2021/22 was forecasted at 5 444 050mt from an actual production of 5 759 016mt in 2020/21. There was also a decrease in the quantity of the cane crushed from local farms as it reduced to 5 759 016mt, from 6 001 618mt forecasted in 2020, which projects a four per cent decrease. This further nullified the sales of sugar as they dropped by 9.9 per cent, they forecasted at 639 874mt in 2021/22 from 709 835mt in 2020/21.

Challenges

The challenges in the industry further affected the rate of exports as they heavily declined by 21 per cent to 210 904mt against 267 139mt in 2020/21. This was outlined by the Chairman of Res Corporation and Tibiyo Taka Ngwane Managing Director, Dr Absalom Dlamini in the Tibiyo Taka Ngwane annual performance report. Dlamini said the reduction in production and consequently sales, were mainly due to poor cane quality in the current reporting period. He said the declined in the quantity and quality of cane crushed contributed to the decrease in production and sales, thus affecting exports.  “Tibiyo has substantial interest in sugar markets globally as a result of having invested heavily in the sugar industry from where it derives more than 80 per cent of its income,” he said. The chairman added that the effects of riots and strikes further contributed to the decline in the performance of the sugar industry. Sugar cane fields were torched by unknown arsonist in the peak of the unrest and about 100 000mt was destroyed.

Sales

“During the reporting period, compared to budget, the Eswatini sugar industry’s pro-duction was lower than budget while sales were relatively on target,” he added. Total assets increased by 7.7 per cent from E2.3 billion to E2.5 billion in 2021. The managing director said the organisation was able to successfully fulfil its mandate to improve, in whatever way possible, the lives of the people of Eswatini, and to partner with government and other stakeholders in their national development efforts. The Res Corporation and its subsidiaries have reported that the total comprehensive income attributed to the owners of the company amounted to E302.6 million, which was 40.38 per cent lower than the record results achieved in 2020/2021.
This was mentioned in their condensed results for the year 2022.

The company said the reduction was due to the lower cane volumes, 3.2 million tonnes of cane was crushed in the period under review, which was seven per cent lower than cane crushed in the same period last year. “The current drop was negatively affected by the late arrival of rains, long after the crop had been stressed, pests and diseases in the form of yellow sugar cane aphid outbreaks,” Res Corporation mentioned in the statement. They said the reduction was also caused by the increased costs due to wet cane harvesting and milling, and significant cost escalations in the last quarter of the financial year following the Russian invasion of Ukraine. They said sugar production was commensurately lower at 424 294 tonnes as compared to 461 567 tonnes for the same period last year. “In addition to the lower cane volumes, an abnormally wet period towards the end of the crushing season led to an extension of the crushing period, characterised by lower sugar recoveries,” attested the company.

Assets

The company also mentioned that the total assets for the period under review amounted to E4.2 billion; they said this was due to the ongoing growth capital projects. This includes 500 hectares of new land development, upgrade of distillation plant in their distillery and mill efficiency initiatives. However, they assumed new debt of E135 million to finance 60 per cent of the expansion projects and cash balances were depleted by the adverse operating conditions and the part equity funding of the ongoing growth initiatives. Res Corporation said they were excellent rains received during the year which sustained dam levels at their maximum storage.

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