Currency challenges stalk foreign companies

ZIMBABWE’S currency challenges have continued to weigh on multinational corporations operating in the country, with latest results showing that hyperinflation and other monetary dynamics remain significant hindrances for operations and profitability.

It comes as the companies have also faced challenges taking out profits from the country due to foreign currency shortages.
In its recently published results for the half-year to September 2021, sugar-processor Tongaat Hulett said its net monetary loss arising from hyperinflation accounting increased to R110 million during the period, from R71 million in the prior comparable period.
“Hyperinflation and currency dynamics continue to distort the fair value adjustments to biological assets reflected in the profit.
“Ordinarily, in the first half of the year, there would be a charge to profits arising from a reduction in the fair value of the sugarcane as it is harvested.”
The company, which has operations across the region, however pointed out that the majority of the profits were generated in Zimbabwe, and the interest and tax are carried in South Africa.
“Consequently, Tongaat Hulett’s share of the profits for the period was negative.”
Tongaat’s currency challenges in Zimbabwe, however, come as Nampak, Africa’s largest diversified packaging manufacturer, recently reported that it had received US$4 million from the Reserve Bank of Zimbabwe as part payment of a US$66,8 million legacy debt it is owed.
newsdesk@fingaz.co