Tongaat in shock decline
Shares plunge 12% as the company's cane drops in value and world markets fall
Sugar producer Tongaat Hulett saw its shares fall as much as 12% on Friday, after reporting a whopping 64% fall in operating profit because of poor sugar cane valuations and incomplete land transactions. White sugar prices on the world market have fallen almost 22% in the past two years. The local sugar industry has also been affected by the proliferation of cheaper sugar imports from regions such as South America, which have led local demand to wane. Tongaat's operations in SA and Mozambique were the biggest contributors to the company's operating profit decline. Deputy chairman of Sasfin Wealth David Shapiro said the results had taken the market by surprise. He said that the losses were likely to be normal write-downs on the valuation of the company's cane but that the market had not expected such large write-downs. For a company like Tongaat, the sugar cane grown in its fields is an asset as in any other business operation. These are said to be biological assets and a value needs...
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