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Illovo to focus on African markets for growth

Illovo to focus on African markets for growth

Photo by Bloomberg

31st July 2015

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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Although JSE-listed sugar producer Illovo had a disappointing 2015 financial year, the company’s downstream business remains strong and its contribution to operating profit is expected to be in excess of 20% in the current financial year.

Illovo chairperson Don MacLeod says the group will be focusing on its domestic markets, both consumer and industrial, and the opportunities available in growing African regional markets, as exchange rate volatility, in general, and the weaker euro, in particular, will continue to be a major influence on export earnings and the conversion of foreign subsidiary profits into rand.

“We will continue to pursue downstream investments to enhance and diversify future revenue streams, [as well as] evaluate opportunities for future footprint expansions in Africa, but careful assessment of the risk will remain crucial to any new opportunity evaluation,” he says in a statement.

Further, MacLeod points out that domestic markets will remain the backbone of the business and that it is “pleasing that demand growth in Zambia remains positive and that market conditions in Tanzania continue to improve”.

However, he highlights that the effective implementation of a new import tariff structure in Mozambique remains elusive, while in Malawi, the strong kwacha, high interest rates and little or no economic growth continued to weigh on demand.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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