Boom possible, post-drought
Tongaat Hulett’s results managed to sneak in positive growth at the top revenue level, but thereafter it all went downhill with all the important numbers being down. The starch and glucose operations and the land conversions did well, but the sugar operations got killed with profit down from R806m to R124m due to the impact of the drought and lower international sugar prices. If the drought is over and we return to normal rainfall patterns, Tongaat should be able to recover markedly in the next year’s results. Land conversions have been doing really well for the company, but how much land does Tongaat have left? Well, there’s a detailed 62-page document on its website (http://goo. gl/9cqarN) that gives great insights. While it only provides five-year targets, the level of detail is impressive and allays any fears that Tongaat may run out of land any time soon. Conversions will be a part of this company’s revenues and profits for a long time to come. The price is already off the lows and I want to dig some more here – a return to normal rainfall patterns could see booming profits next year.