Sugar not sweet on Tongaat
Tax and low demand drive Hulett share price down to R37
Shares in SA's biggest sugar producer, Tongaat Hulett, plunged more than 20% on Friday after the company warned that full-year earnings would fall as much as 250% because of low global sugar prices, the impact of the sugar tax and falling property sales. It's the KwaZulu-Natal-based company's biggest one-day collapse in more than 22 years. The share price ended trade at its lowest level in about 14 years. The 127-year-old sugar producer has a number of issues crippling its operations and says it is undergoing a "comprehensive strategic and financial review with the view to stabilising the business". At the core of Tongaat's falling sales are a number of supply-side challenges. The global market is oversupplied with sugar, leading to a drop in the sugar price. Locally, the problem has been exacerbated by the recently introduced sugar tax that has had a negative impact on sugar sales in SA. In Mozambique, where Tongaat has operations, cheap imports are affecting demand for its product...
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