Starafrica Corporation Limited is enjoying stronger demand and rising sales volumes, but supply constraints are emerging as a key test of whether the food manufacturer can sustain its growth.

In its first-quarter trading update for the period ended June 30, 2026, the company said revenue increased by 31% compared with the same period last year, supported by a 38% increase in Goldstar Sugars (GSS) granulated sugar sales volumes and a 19% rise in Country Choice Foods volumes.

However, the growth has not been without pressure.

Starafrica said its share of profit from its associate declined by 25%, mainly because of product supply constraints in the Botswana market.

The company said it remained focused on addressing the supply gaps at the associate to improve future production and sales volumes.

“The Group also remains committed to addressing the supply gaps at its associate to boost future production and sales volumes,” management said in the trading update.

The supply constraints come against a broader operating environment in which Starafrica is benefiting from stronger demand and improved foreign currency availability.

Management said the economy’s stronger mining and tobacco sectors were generating foreign currency inflows, supporting positive operational cash generation and the group’s performance.

The company said market demand remained strong and was expected to persist throughout the financial year, creating room for further expansion.

It plans to unlock previously underutilised production capacity and expand its distribution networks to reach more customers.

Plant availability has also improved since the end of the quarter, with Starafrica citing stable utilities and the successful delivery of critical equipment spares.

During the quarter, however, production faced logistical and utility-related disruptions.

The company said geopolitical conflicts in the Middle East delayed deliveries of critical spares, resulting in logistics-related plant downtime.

Water shortages also affected production, prompting the company to commission additional boreholes to secure supplies.

The challenges highlight the vulnerability of food manufacturers to disruptions beyond market demand, particularly when production depends on reliable utilities, imported equipment and efficient supply chains.

Despite these pressures, Starafrica’s operating performance strengthened.

Operating profit rose 58% year-on-year, helped by higher sales volumes and increased sundry income, although rising operating expenses partly offset the gains.

The stronger volumes, however, came with pressure on margins. Gross profit margin declined to 17%, from 18% in the comparative period, as higher input costs absorbed part of the benefits of increased sales.

Starafrica identified inflationary pressures, including higher fuel prices and global cost pressures, as continuing risks to profitability.

“Stringent cost containment” therefore remains a priority for the group, according to management.

The company’s property business was comparatively stable, with Silver Star Properties maintaining steady occupancy rates and no rental rate adjustments. Rental income nevertheless recorded a modest increase as tenant occupancy improved.

Starafrica’s first-quarter performance therefore presents a mixed picture: demand is strengthening and production volumes are rising, but the company still faces supply, utility, logistics and cost pressures that could determine how much of that growth translates into sustained profitability.

For the Botswana associate in particular, resolving product supply constraints will be critical if Starafrica is to convert stronger market demand into higher sales and profits.