Tongaat’s earnings growth in line with expectations
Tongaat Hulett on Monday reported a 44.6% rise in headline earnings to R982m, which was in line with its recent guidance.
The rebound in the performance of its main sugar operations did the heavy lifting, making up for a slack in the starch operations, and the land management and development arm.
Tongaat, which operates in a cyclical agricultural industry, realised R1.27bn in operating profit from sugar operations in the year to end-March, which was a turnaround from a loss of R15m in the year-earlier period.
The R15.7bn company, which has operations in neighbouring countries, including Zimbabwe, Mozambique and Swaziland, attributed the improvement in the sugar operations to higher sugar prices, export prices and effective import duties in the geographies in which operates.
Sugar production crept up to 1.056-million tonnes, from 1.023-million tonnes, as the drought in KwaZulu-Natal and poor growing conditions in Zimbabwe and Mozambique affected volumes.
Operating profit in the starch and glucose operation dropped to R510m, from R658m, as a result of high maize costs that resulted from the drought.
Tongaat also generates income from land conversion and development activities. In this regard, operating profit dropped to R641m from R1.11bn.
The company said it would continue to focus on its strategic positioning, which would lead to positive effect on earnings and cash flow.
"Weather and growing conditions over the past two years have masked the substantial progress that is being made with intensive agricultural improvement programmes, increased hectares under cane, irrigation efficiency and power reliability," it said in a statement.
The final dividend per share was 200c, bringing the total to 300c, which was up 30.4% on year-earlier period.