South African industrial group Tongaat Hulett on Monday reported a strong return to profitability with basic headline earnings per share of 210,4 cents for the year ended December 31 2004 after a loss of 91,7 cents a year ago.
A final dividend of 120 cents per share was declared, making a total of 170 cents for the year, compared with 120 cents per share in 2003.
The company commented that management actions continued throughout the group to improve profitability, and early benefits of these actions are reflected in the 2004 results.
The proactive optimisation of capacity utilisation, enhancement of sales mix, improvement of raw material procurement, growth of volumes and reduction of costs will realise further considerable value from the group’s strong asset and business base.
Headline earnings amounted to R214-million after a loss of R93-million a year ago, generated off revenue of R6,3-billion, from R6,6-billion in a year when the rand strengthened against the dollar by 15%.
Operating profit amounted to R364-million from R80-million before.
“These earnings show an improvement of R307-million from the headline loss in 2003. This is in line with the ongoing Tongaat-Hulett strategy of unlocking the earnings improvement opportunities that exist in the balanced group of four sizeable, strategically positioned and focused operating companies,” it said.
African Products experienced a year of transition, with a move to a new maize procurement and product pricing model, and the commencement of a profit recovery. Operating profit improved to R63-million from a loss of R104-million despite the pressure of the exchange rate on local pricing and export contributions, together with the high priced maize procured under the previous business model.
Hulett Aluminium improved its operating profit to R150-million from R5-million in 2003, with the group’s share being 50% thereof. The focus remains on increasing volumes, improving product mix and reducing unit costs.
“These factors have together generated financial benefits approaching R450-million in the past two years, and have largely offset the effects of the strengthening rand,” it said.
Moreland’s platform of prime property developments established over the past decade has enabled it to capitalise on the favourable resorts and residential property market and post a record operating profit of R182-million from R90-million before.
Tongaat-Hulett Sugar’s profit from operations, before interest, totalled R184-million from R202-million a year ago. This includes dividends from Triangle, the equity-accounted share of operating profit at Xinavane in Mozambique, and is before restructuring costs.
The relatively low sugar crop for the second year in a row, together with the decrease in the South African domestic sugar price late in 2003 and the strengthening rand’s effect on export realisations, depressed margins in 2004.
Looking ahead, the group said it is well placed to increase the returns in its businesses and there are signs of improving economic conditions in the areas where it operates.
The benefits of the actions being taken across the group to grow earnings will increasingly be reflected in future financial results. Considerable earnings growth is expected in the year ahead, it concluded. — I-Net Bridge