Tongaat Hullet eyes 42 percent rise in profits

TONGAAT Hullet’s Zimbabwes operating profit for the half-year to September 30, 2017 is expected to rise by 42, 6 percent to R358 million.

Tongaat’s sugar operations in Zimbabwe comprise the wholly owned Triangle Sugar operation and its 50, 3 percent holding in Hippo Valley Estates.

According to the South African-headquartered sugar producer, Zimbabwe posted the highest growth in operating profit during the period among the group’s regional operations.

“Operating profit for the half-year from the various sugar operations is expected to total approximately R835 million (2016: R825 million),” said Tongaat Hullet in a voluntary trading statement for the period.

“The major components are the South African sugar operations, including various downstream activities, with expected operating profit of R211 million (2016: R306 million), Mozambique with R232 million (2016: R219 million), Zimbabwe with R358 million (2016: R251 million) and Swaziland with R34 million (2016: R49 million).

Earlier in March, the group said raw sugar production in Zimbabwe could rise by 26 percent over the next couple of years on increased sugarcane production on the back of a positive rainfall season.

In this respect, projected output for 2017/2018 season will be between 400 000 and 425 000 tonnes. And raw sugar output for the country should rise from the 453 000 tonnes this year to an estimated 535 000 to 570 000 tonnes in the 2018/2019 season.

Meanwhile, the group says operating profit for the half-year “is expected to be R1, 471 billion (2016: R1, 350 billion), an increase of some nine percentage. Headline earnings are expected to be approximately R661 million compared to the R631 million earned in the previous half-year, an increase of some 4, 8 percent.

“This period has seen a considerable increase from land conversion and developments. The sugar operations have seen the beginning of the production volume recovery after the drought conditions of the previous two years.

“This benefit was offset by the impact of lower world sugar prices and a period of high imports into South Africa while there was a gap in duty protection which has subsequently been resolved.

“The starch operations experienced the carry over effect into the first half of the year of maize costs at import parity as a result of the previous season’s drought, simultaneously with lower co-product revenues,” said the group.