BY THEMBA ZWANE
MBABANE– The Royal Eswatini Sugar Corporation (RESCorp) says a 4% increase in production costs, coupled with weak sugar prices and adverse weather conditions, contributed to a decline in turnover during the financial year ended 31 March 2026.
The company made the remarks in its condensed audited financial results for the year ended 31 March 2026, published on the Eswatini Stock Exchange on 3 July 2026.
According to the results, turnover declined by 7.5% to E4.6 billion compared to the previous financial year. RESCorp attributed the decline to increased cost inflation on production inputs and higher wet harvesting costs, which pushed the cost of sales up by 4%.
The group also recorded a further reduction of E159.8 million in the fair value of biological assets, compared to E16.8 million in the previous year. It said the movement reflected the impact of lower sugar prices, although this was partly offset by higher sucrose volumes resulting from cane that remained unharvested due to prolonged rainfall.
Despite the difficult operating environment, administration expenses were reduced by 3% after the company cut consultancy fees, employment costs and discretionary spending in response to adverse pricing conditions.
Operationally, cane crushed increased marginally by 0.5% to 3.15 million tonnes. Estate sucrose yields improved to 13.39 tonnes of sucrose per hectare from 12.43 tonnes recorded in the previous year, a development the company attributed to improved climatic conditions for crop growth.
However, excessive rainfall between October 2025 and March 2026 disrupted harvesting and milling operations. RESCorp said the harvested area was 9% below target and 6.4% lower than the previous year. During the wet period, only the Mhlume mill remained operational from October until mid-January 2026, while the Simunye mill entered the off-crop season early in anticipation of better harvesting conditions later in the season.
Instead, March 2026 rainfall reached levels three times higher than historical averages, further delaying harvesting operations and forcing nearly 2 000 hectares of cane to be carried over into the 2026/27 financial year.
The company said global market conditions also weighed heavily on performance. Average sugar prices declined by 8% year-on-year, while the average world raw sugar price fell by 21.5% to 15.57 US cents per pound. At the same time, a stronger Lilangeni encouraged an influx of imported sugar into the Southern African Customs Union market, intensifying pricing pressure.
Ethanol production dropped by 19% to 25.9 million litres as weak market demand and limited storage capacity constrained production. Ethanol sales also fell by 12.5% to 23.1 million litres, with the company citing non-tariff trade barriers and shipping disruptions linked to the Middle East conflict.
Cash generated from operating activities declined by 48.7% to E316.8 million.
During the year, the group secured E75 million in new borrowing to finance approved growth projects carried over from the previous financial year.
Reflecting the challenging trading conditions, dividends declared for the year amounted to E56.3 million, significantly lower than the E255.3 million declared in the previous financial year, while dividends paid totalled E171.3 million.
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(Courtesy Pic)
