Late rain to help Ton­gaat Hulett

The Star Early Edition - - COMPANIES - Tawanda Karombo

CUR­RENT heavy rains that are pound­ing Zim­babwe have breathed fresh im­pe­tus into Ton­gaat Hulett’s Zim­babwe op­er­a­tions, although the ben­e­fits will only likely ac­crue to start next year.

Ton­gaat Hulett con­trols Zim­babwe Stock Ex­change (ZSE) listed Hippo Val­ley and also has a sig­nif­i­cant stake in Tri­an­gle Sugar Corporation, also in Zim­babwe.

In the in­terim pe­riod to the end of Septem­ber 2016, Ton­gaat Hulett said op­er­at­ing profit from its Zim­babwe op­er­a­tions amounted to R251 mil­lion, with pro­duc­tion and sales vol­umes “rel­a­tively con­sis­tent with the prior year”.

Ex­ec­u­tives at the com­pany are now ex­pect­ing “a higher pro­por­tion of pro­duc­tion” in the sec­ond half pe­riod to the end of March this year. They said that “the fo­cus for 2017 is to re­cover from the re­cent drought”.

“Sugar cane re­quires at least 12 months to ma­ture and as such the full ben­e­fits of the cur­rent rains will be re­alised in the 2018/19 har­vest sea­son,” Ade­laide Chikun­guru, the cor­po­rate af­fairs ex­ec­u­tive for Ton­gaat Hulett’s Zim­babwe op­er­a­tions said.

Hippo Val­ley and Tri­an­gle had been badly af­fected by dry weather that hit the re­gion in the past year. While the rains have wreaked havoc for other crop grow­ers such as maize – with the army worm de­stroy­ing crops – it has been a boon for Ton­gaat, of­fi­cials con­firmed.

“The ma­jor dams sup­ply­ing ir­ri­ga­tion wa­ter to the sugar in­dus­try con­tinue to re­ceive sig­nif­i­cant in­flows on the back of the cur­rent rain­fall con­di­tions. This de­vel­op­ment has sig­nif­i­cantly in­creased the se­cu­rity of wa­ter re­quired by the in­dus­try,” said Chikun­guru.

Hippo Val­ley is one of the re­silient and at­trac­tive stocks on the ZSE and it also ex­ports into the EU un­der ship­ment quo­tas.

In a bid to shore up its ir­ri­ga­tion ca­pac­ity, Hippo Val­ley had availed about $6.6 mil­lion (R89.5m) to help with com­ple­tion of the Tokwe Muko­rsi Dam last year. Com­ple­tion of the dam will pro­vide fu­ture cer­tainty re­gard­ing ir­ri­ga­tion for the sugar es­tates.

Hippo Val­ley man­ag­ing di­rec­tor, Syd­ney Mt­sam­biwa, said: “Ton­gaat Hulett availed for­eign cur­rency from its ex­port pro­ceeds to en­able a crit­i­cal stage of the dam con­struc­tion to be com­pleted.”

Zim­babwe and Mozam­bique have moved to im­pose im­port re­stric­tions on sugar. How­ever, Ton­gaat Hulett is fac­ing chal­lenges with the sweet­ened sugar tax that could lead to sup­pressed de­mand for sugar prod­ucts.

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