RES Corporation has reported that for the 2024/25 financial year, sugar production was five per cent higher, at 412 095 tonnes 96° pol sugar, compared to 391 400 tonnes in the previous year. This growth was driven by higher sucrose volumes, improved yields, and better sugar recoveries in the mills.
According to RES Corp’s financial statement for the year ended March 31, ethanol production stood at 31.9 million litres, a seven per cent increase compared to the previous period, due to improved cane yields and consequently, higher molasses available to the distillery.
Ethanol sales reached 27.4 million litres, which is 11 per cent lower than the comparative period, resulting in higher closing inventory. The reduction in sales volume is attributed to delayed product off-take by European customers, the loss of some SACU customers due to liquidation, and difficult trading dynamics in the East African market.
“Sugar and ethanol pricing were both under pressure, with sugar and ethanol recording a below-inflation increase of 2.8 per cent and 1.7 per cent respectively,” reads the report.
The average raw sugar price for the year was 19.88 USc/lb, which is 19 per cent lower than the previous year.
Financial Performance Overview
– Turnover stood at E5 billion, a 4.5 per cent increase over the previous year.
– Cost of sales increased by 3.1 per cent, closely tracking turnover growth.
– The fair value change of biological assets was dilutive at E16.8 million, compared to a gain of E280.3 million the year before. This drop reflects lower sucrose yield assumptions and slight price reductions, whereas the previous year saw a boost from a significant change in cane age.
– Other income rose by 35 per cent, primarily due to income from toll milling for the Eswatini sugar industry and one-off sugar sweep-out gains.
– Administration expenses were eight per cent higher, driven by increased consultancy costs related to renewable energy and alcohol diversification studies.
Performance of Associate Companies
– Share of profit from associate companies stood at E39.8 million, a 17 per cent drop from the previous period.
– Within that, sugar sector associates declined by 12 per cent, and fertiliser sector associates dropped by 26 per cent.
– The decline is attributed to flat sugar pricing, aggressive SACU market competition, raw material shortages, and lower fertiliser prices.
Net Income and Cash Flow
– Total comprehensive income attributable to the owners of the company was E414.3 million, marking a 35.4 per cent decrease from 2023/24.
– Cash generated from operating activities dropped by 9.7 per cent to E593.5 million, due to unfavourable working capital movements—driven by higher inventory and higher year-end sugar price retention.
Outlook
The estate crop size for the 2025/26 financial year is forecasted to improve by 6.5 per cent, thanks to better climatic conditions and the harvest of new cane areas. Accordingly, sugar production is expected to increase by a similar margin.
“Sugar markets are expected to remain under tight pressure, with currency remaining exposed to higher-than-normal volatility. The 2024/25 season delivered a below-inflation price increase for both sugar and ethanol, and the outlook for 2025/26 projects similar below-inflation increases,” the report concluded.
Eswatini Observer Press Reader
