shloboe boe
Nqobile Bhebhe, [email protected]
Limited, a major player in Zimbabwe’s sugar milling industry, has announced a phased retrenchment exercise in response to rising operational costs and growing competition from low-cost, duty-free imported sugar.
The move, conducted in accordance with the Labour Act of Zimbabwe, is part of the company’s restructuring initiative, Project Zambuko, aimed at stabilising operations and ensuring long-term sustainability.
The retrenchment process will occur in three phases: the first beginning in February, the second in May and the final phase in August.
In a notice to employees, managing director, Mr Tendai Masawi, described the decision as a difficult but necessary step to secure the company’s future and maintain its vital role in Zimbabwe’s economy and the livelihoods of communities in the Lowveld region.
Mr Masawi attributed the decision to several financial and operational challenges, including escalating costs of key inputs such as fertiliser, fuel and maintenance, coupled with inflationary pressures and currency losses.
Since 2022, Triangle Limited has faced a 55 percent decline in profit margins, a 133 percent rise in manpower costs as a percentage of revenue and unsustainable debt levels.
Compounding these challenges is the inability to claim Value Added Tax (VAT) on inputs following the exemption of sugar from VAT, as well as revised cane supply arrangements, which have constrained cash flow generation for three consecutive years.
“While we have managed to address the decline in sugar production, our cost of producing sugar remains significantly higher than regional benchmarks, making it unsustainable. Despite implementing multiple cost-reduction and revenue-enhancement initiatives, these efforts have not been enough to stabilise the business,” said Mr Masawi.
He emphasised that the retrenchment exercise will be conducted sensitively and in full compliance with the Labour Act. Affected employees will receive severance packages based on their years of service.
Mr Masawi clarified that the decision is driven solely by local economic and operational factors and is unrelated to the business rescue process involving Triangle Limited’s South African shareholder or its acquisition by the Vision Consortium.
He added that the phased approach will help the company manage the transition effectively while ensuring business continuity.
Zimbabwe’s sugar industry has been grappling with increasing competition from low-cost imports, particularly from Brazil, India, South Africa and Eswatini.
These duty-free imports have disrupted local markets, threatening institutional producers like Triangle Limited and Hippo Valley Limited, as well as the livelihoods of approximately 354,000 individual growers in the Lowveld.
Mr Masawi reiterated that the retrenchment exercise is essential to securing Triangle Limited’s long-term sustainability and its continued contribution to Zimbabwe’s economy.
“These financial realities underscore the urgent need for corrective action to enable the business to generate sufficient cash flows, reduce debt and reinvest in its future,” he said.
