The Royal Eswatini Sugar Corporation (RES) says it expects weather conditions in 2023/24 to be drier as compared to the current reporting period.
The Group notes in its consolidated financial results for the year ended 31 March 2023 that the crop estimate for 2023/24 shows a slight increase against 2022/23, due to the negative impact of having to harvest the crop at a younger age.
“The slight increase curtails the Groups’ cash generation base in an already difficult inflationary climate. In 2023/24 the Group will pause the expansion drive to resume in 2024/25 when normal production levels are expected.”
Despite announcing a pause in its expansion drive the group has noted that it has assumed new debt to finance expansion projects.
“RES has assumed new debt of E326 million to finance approximately 70% of its expansion projects. The company also notes that in March 2023 it acquired a 35% stake in Enviro Applied Products (Proprietary) Limited.”
Furthermore, the group reveals that it is working towards the investment of E200 million in the 2023/24 financial year in an alternative energy project.
On another note, the corporation reported a total comprehensive income of E178.5 million for the year ended 31 March 2023. The income, however, is 41% lower than the result achieved in 2021/22.
RES has attributed its reduced comprehensive income to higher operating costs, and lower sugar volume, as well as an adverse change in the fair value of standing cane, due to the cane age factor.
The Group states, however, that the above adverse consequences were partially cushioned by the benefit of an improved sugar price and the sterling result by the Ethanol segment.
“Operating costs were significantly higher, due to the inherent inefficiency embedded in harvesting and crushing under the wet winter and summer conditions. The geopolitical impact of cost inflation due to the Russia/Ukraine conflict was present throughout the financial year.”
Despite the increased income, the group continues to show a strong financial position with total assets amounting to E4.6 billion.