• Swung from an operating loss of $3 million  to an operating profit of $1.1 million in FY2026, with profit after tax improving from a $4.8 million loss to a $1.4 million profit,
• The group ended the year with a working capital deficit of $2.23 million, negative cash of $376,249, and an overdraft of $2.1 million
• Management expects improved profitability in FY2027 driven by volume growth.

Harare- Star Africa Corporation Limited, Zimbabwe’s sugar producer and distributor’s turnover declined 9% to $58.1 million from $63.9 million in the prior year primarily driven by strategic price reductions implemented at the start of the financial year to defend local market share against imports.

Despite the lower revenue base, the group swung from an operating loss of $3 million in FY2025 to an operating profit of $1.1 million in FY2026, and profit after tax rebounded from a loss of $4.8 million to a profit of $1.4 million, though the board resolved not to declare a dividend, in order to preserve working capital.

The turnaround in profitability was driven substantially by items below the operating line rather than by underlying trading momentum. Exchange movements swung from a loss of $8.4 million in FY2025 to a gain of $791,070 in FY2026, a reversal that alone accounts for the bulk of the year on year improvement in reported earnings.

Administrative expenses were reduced to $8.2 million from $9.4 million, reflecting cost containment initiatives. These gains were partly offset by a fair value loss of $1.7 million on the group's investment property portfolio, against a fair value gain of $3.2 million in the comparative year, and the group also carried an expected credit loss charge of $144,489 for the year.

Finance costs of $452,111 were incurred on newly drawn borrowings, and the group's share of profit from its associate rose 94% to $655,422, supported by higher turnover and improved cost containment at the associate level. Taken together, the profit  recovery leans heavily on currency translation effects and cost discipline rather than on a rebound in trading volumes or pricing power.

At the segmental level, Goldstar Sugars, the group's sugar refining operation, delivered sales volumes of 59,596 tonnes in FY2026, broadly in line with the prior year's 59,613 tonnes, while production of 60,819 tonnes was up from 60,212 tonnes, and demand driven rather than capacity constrained, and the plant has considerably more room to grow, with installed capacity to produce 120,000 tonnes of white sugar annually, uplifted to 180,000 tonnes with additional capital expenditure.

The company’s efforts to improve competitiveness against imports at the start of the year succeeded in reducing import volumes, and that Goldstar maintained its Coca-Cola Company and FSSC 22000 quality certifications during the year. Country Choice Foods, the group's specialties business, was the standout segment on a growth basis, with volumes up 63% to 2,311 tonnes from 1,416 tonnes, driven by improvements to the distribution model and rising disposable incomes, although management flags grey imports as a persistent competitive threat.

The group's properties and investments division saw rental income grow 9% to $389,264 from $356,225, supported by rental adjustments and tenant retention, with management pursuing self funded refurbishments to sustain portfolio performance.

Meanwhile, cash and cash equivalents stood at negative $376,249 at year end, against negative $2.6 million in the prior year, while the group carried a bank overdraft of $2.1 million. During the year the group drew new long term borrowings of $4.2 million, comprising a shareholder loan of $3.8 million and a Nedbank loan of $465,640, alongside short term borrowings of $523,963, all bearing a weighted average interest cost of 11%, with bank loans and overdrafts secured against immovable property valued at $4 million.

Net cash flows generated from financing activities were $4.75 million for the year, largely reflecting these new borrowings, while net cash flows used in operating activities were negative $351,667, a reversal from positive operating cash flow of $3.3 million in the prior year.

Total assets grew to $36.5 million from $31.7 million on a restated basis, but total equity fell to $13.3 million from $15.5 million, and accumulated losses, while narrower than the prior year, remained at $1 million.

The group's current liabilities exceeded its current assets by $2,230,723, an adverse working capital position that the group attributed to losses incurred in previous reporting periods. This position has been addressed through a re-organisation of the business, and the group is forecasting a return to stronger profitability in FY2027 on the back of that re-organisation and forecast volume growth, concluding that the going concern basis of preparation remains appropriate.

On earnings per share, the improvement in the bottom line translated into basic earnings per share of 0.03 cents, against a loss of 0.11 cents per share in FY2025, while headline earnings per share rose to 0.05 cents from 0.03 cents, on a weighted average of 4,808,662,335 ordinary shares in issue throughout both years. The board's decision not to declare a dividend despite the return to profit reflects the priority placed on preserving working capital given the deficit position disclosed in the going concern note, and represents a more conservative capital allocation stance than the modest per share profit improvement alone might have suggested was available for distribution.

Outlook for FY2027 centres on forecast volume growth at both Goldstar Sugars and Country Choice Foods, supported by improved competitiveness, government efforts to curb illicit and undervalued imports, and better distribution, with the long term finance raised during FY2026 cited as having addressed part of the group's working capital challenge. However, the group flagged continuing risk from market informalisation, with the National Consensus Survey estimating that 76% of operational businesses in Zimbabwe are unregistered, creating persistent competitive and compliance pressure on formal manufacturers such as Star Africa, and from unresolved government policy on the VAT classification of white sugar and the sugar tax, both of which the company says continue to adversely affect performance.

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