TOUGH SPACE

Finweek English Edition - - SIMON SAYS - BY SIMON BROWN

The I l l ovo a nd Ton­gaat Hulet t re­sults both showed just how tough the sugar space is right now. Drought in many grow­ing ar­eas cou­pled with lower global sugar prices have hurt rev­enues al­beit both have op­er­a­tions across many coun­tries, mean­ing that drought only ever hits pock­ets of their op­er­a­tions rather than the en­tire busi­ness. Ton­gaat has the slight edge as it also has l and sales and i n t he last year this made up some 40% of op­er­at­ing profit. This re­duces the risk of the busi­ness and smooths earn­ings to a de­gree. That said, I would only be in­ter­ested in Ton­gaat when sugar prices are on an up­ward trend rather than a down­ward trend.

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