Illovo Sugar Malawi plc has reported a significant increase in revenue, reaching K314 billion in 2024, up from K272 billion in the previous year. However, the company’s net profit took a hit, declining by K34 billion to K23 billion, compared to K57 billion in 2023.
According to Interim Managing Director Kondwani Msimuko, the decline in profit is largely attributed to changes in the corporate tax regime, which now imposes a 10% tax on businesses earning profits exceeding K10 billion. External challenges, including cyclones that affected the country, also contributed to the profit decline.
“In the last budget, the government introduced an extra layer of corporate tax. So there was a legislative that any profits above $10 billion should be taxed at 40%. So that, on August 24, actually resulted in an increase of $10 billion more tax payments than in the previous year,” said Msimuko.
Despite the challenges, Illovo Sugar Malawi saw a notable decrease in foreign payables, which dropped by K56 billion to K105 billion, down from K161 billion in 2023. The company also invested K1.2 billion in Corporate Social Responsibility initiatives in 2024.
During the company’s Investors Day Forum in Blantyre, Msimuko acknowledged investors’ concerns over the drop in dividends, which decreased from K25 per share in 2023 to K5 per share in 2024. He assured investors that the company is implementing diversification strategies to mitigate future risks and sustain profitability.
One of the investors, Frank Harawa, expressed concern over the decline in profit during the Investors Day Forum. “While I appreciate the efforts made by the management to increase revenue, I am worried about the significant drop in profit,” Harawa said. “As an investor, I expect to see a reasonable return on my investment.”
Harawa urged the management to provide a clear plan to address the challenges that led to the decline in profit.
