Triangle Limited Retrenches Workers

Economic Crisis Hit Zim Companies

Zimbabwean sugar giant Triangle Limited, which has been part of the country’s corporate landscape for decades, says it is retrenching workers beginning next month due to worsening economic and operational problems bufetting the company.

This comes as a number of other Zimbabwean companies are downsizing, restructuring and closing down due to the worsening economic situation.

Zimbabwe’s protracted economic crisis and attendant deindustrialisation have been mainly fueled by leadership, governance and policy failures, as well as mismanagement and corruption.

Global economic and trade disparities and problems have exacerbated the situation.Explaining the retrenchment process which starts next month, Triangle managing director Tendai Masawi said:

“The current economic environment in Zimbabwe has presented unprecedented challenges for TriangleLimited over the past [three] years.

“Escalating operational costs, particularly in areas such as fertiliser, fuel, maintenance costs and imported goods/services, combined with inflationary pressures, currency losses, the inability to claim VAT on inputs after sugar was exempted from VAT, and competition from low costduty-free imported sugar, have severely impacted our ability to sustain current levels of operation.

“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.

“The company has been unable to generate positive cash flows from its operating activities for the past three years, and has faced a veryconstrained working capital position since the implementation of the revised cane supply arrangementswhich has necessitated constant trade-off between what the business needs and what it can afford.

“These financial realities underscore the urgent need for corrective action so that the business can generatesufficient cash flows to reduce debt and reinvest in its future

“While we have managed to address the declining trend in sugar production, our cost of producing sugar remains significantly higher than regional benchmarks, which is no longer sustainable.

“Ongoing discussions with stakeholders regarding the division of proceeds among farmers and millers, as well as continued pressure for adjustments to wage agreements may further strain our financial outlook.

“Despite implementing numerous cost-reduction and revenue-enhancement initiatives, these efforts haveproven insufficient to stabilise the business.

“This decision has been taken to protect the long-term sustainability of our organisation and ensure that Triangle Limited continues to play its vital role in Zimbabwe’s economy and the livelihoods of communities in the Lowveld region.

“It is important to note that the decision to retrench employees in Triangle is entirely based on local economic and operational challenges.

“This retrenchment process is not related to the business rescue process of the company’s shareholder in South Africa or the acquisition of the business by the VisionConsortium.”

Triangle, located 445km southeast of the capital city of Harare, is owned 100% by South African-based regional agri-business giant Tongaat Hulett.

Tongaat, which is under business rescue, also owns Zimbabwe Stock Exchange-listed Hippo Valley Estates 50.3%.

In 2006, Anglo American sold its 50.3 stake in Hippo Valley Estates to Triangle Sugar, the Zimbabwean unit of Tongaat.

In Zimbabwe, Tongaat’s two operations have a combined capacity to crush over 3.5 million tons of sugarcane per annum.

The Huletts Sunsweet® brand is the leading sugar brand in the country.

Triangle operation has the capacity to produce over 30 million litres of ethanol each year.

BACKGROUND

Triangle Limited is an agri-based sugar company and is wholly owned by The Tongaat Hulett Group.

Murray MacDougall, assisted by Tom Dunuza founded the company in 1919 to ranch cattle but a severe downturn in the economy during the post World War 1 recession led Triangle into crop production in the late 1920s.

The main crop cultivated was wheat, but Triangle started growing sugarcane in 1934 with only 18 hectares under irrigation.

The first sugar-processing mill in Zimbabwe was opened at Triangle on 11 September 1939.

Numerous problems followed, which saw the government taking over the company in 1944. In 1954, a South African company, the Natal Syndicate purchased Triangle, only to be taken over in 1957 by Guy Hulett who was running a business consortium in Natal.

This marked the beginning of the Tongaat association with Triangle.

Triangle’s expansion was started in the early 1960’s, with development of water storage and conveyance infrastructures for the irrigation of sugarcane.