Sugar producer Triangle is laying off workers, unable to meet rising costs despite a recent recovery in production.
The company has told workers that “the current economic environment in Zimbabwe has presented unprecedented challenges for Triangle Limited over the past three years”.
It has not said how many jobs it plans to cut.
Triangle has given a long lists of reasons for its decision to let go of staff; rising costs of fertiliser, fuel, maintenance, currency losses,
the inability to claim VAT on inputs after sugar was exempted from VAT, and competition from low cost duty-free imported sugar.
“Since 2022 we have seen profit margins decline significantly by 55%, manpower costs increasing by 133% as a proportion of revenue, and debt levels rising to unsustainable levels,” Triangle tells workers in a notice.
“The company has been unable to generate positive cash flows from its operating activities for the past three years, and has faced a very constrained working capital position since the implementation of the revised cane supply arrangements, which has necessitated constant trade-off between what the business needs and what it can afford.”
Triangle is part of Tongaat Hulett, whose Zimbabwe division produces over 50% of the country’s sugar. The troubled SA-based group is being taken over by the Vision Group, led by South African businessman Robert Gumede, under a deal meant to cover debts left in the wake of an accounting scandal. Triangle says the layoffs have nothing to do with the Vision transaction.
In the six months to September, Hippo Valley Zimbabwe produced 159,426 tonnes of sugar, 8% more than the same period in 2023. But this hasn’t been enough to cover costs.
“While we have managed to address the declining trend in sugar production, our cost of producing sugarremains significantly higher than regional benchmarks, which is no longer sustainable,” Triangle says.
