/ 30 May 2011

Tongaat Hullet has mixed year

Agricultural and agri-processing business Tongaat Hulett had a mixed year, according to its annual results for the year ending March 31, 2011.

“The past year continued to be characterised by counteractive factors, “Tongaat Hulett CEO Peter Staude said in a statement on Monday.

Headline earnings — a measure of profit — were down to R806-million from R815-million in 2010.

Revenue of R9 681-billion was up from 2010’s R8 789-billion.

Tongaat Hulett declared a final dividend of 140 cents a share, which brought the total annual dividend to 250 cents a share.

“The South African sugar production was the lowest in many decades for Tongaat Hulett,” Staude said.

In addition, exchange rates were less favourable than the year before.

Progress towards using its full sugar milling capacity of about two million tonnes a year was hampered by a severe drought in the 2009/10 growing period in South Africa and poor growing conditions in Mozambique in early 2010.

Staude said sugar realisations in the past year in the Mozambique local market and on exports from South Africa were constrained.

However, the group achieved favourable prices on exports from Mozambique and Zimbabwe into the European Union and the United States.

Land under cane increased by 7 800 hectares and better than expected future yields, crop positioning and improved sugar prices led to an increase in the value recorded for the sugar cane growing crop at year end, Staude said.

The results of the starch operation improved substantially.

“Tongaat Hulett’s financial results remain sensitive to movements in the Rand, US dollar, Euro and Mozambique Metical,” he said.

“These impact on the revenue streams, costs incurred and the conversion of profits into rands.”

However, the group was expecting “considerable growth” in profit from operations in the year ahead.

“The large South African maize harvest in 2010 and the high maize stock levels from the previous two seasons should maintain local maize prices close to world prices and contribute to the competitiveness of the starch operation,” said Staude.

“Higher international starch prices are countering the impact of the exchange rate.”

Tongaat Hulett expected to make progress in growing sugar production with the target of doubling its 2010/11 production through using its available milling capacity while reducing unit costs.

Production in Mozambique was expected to increase by more than 50% in the 2011/12 season to between 250 000 and 270 000 tonnes of sugar, with an increase in hectares harvested, higher cane yields and improved sugar extraction from cane anticipated.

Zimbabwe’s sugar production in the 2011/12 season was expected to increase to between 360 000 and 380 000 tonnes of sugar, with better cane age and yields on a similar number of hectares being harvested.

“In South Africa, sugar production is expected to increase in the 2011/12 season, notwithstanding the variable growing conditions at the beginning of the year, as the cane recovers from the drought of 2010,” Staude said.

He said renewable energy, in both electricity generation and ethanol production from sugar cane, provided substantial future opportunities. — Sapa