Tongaat Hulett profits in challenging year

Agri-processing business Tongaat Hulett continued to increase profit from operations, despite what company CEO Peter Staude called a challenging 2007. The company’s operations, which include integrated components of agriculture, property development and land management, posted a record profit of R838 million for the year ending 31 December 2007, 15% or R112 million up on Tongaat Hulett’s 2006 financial year. Profit from the company’s sugar operations during 2007 was R360 million, only R4 million up on 2006’s R356 million. Staude explained that Tongaat Hulett’s Zimbabwean sugar operations were accounted for on a dividend-received basis only. “Total sugar production for the company in 2007 was 1,119 million tons, as opposed to the 1,067 million tons produced in 2006 before our acquisition of Hippo Valley Estates in Zimbabwe,” said Staude. “Hulett’s five operations in Mozambique, Zimbabwe and Swaziland, contributed R176 million to the profit from company operations, R77 million up on 2006.” “Our raw sugar export volumes from South Africa were reduced to 245 000t from 2006’s 316 000t and were sold at an effective world sugar price of US$0,11/lb – down from US$0,13/lb in 2006, at an average R7,12 to US$1, as opposed to 2006’s R6,56/US$1,” said Staude. “South African domestic sales were 460 000t last year.” T ongaat Hulett said they expect the completion of sugarcane expansions in Mozambique to bring sugar production above 260 000t in 2009. “Our focus for South African sugar operations includes new cane procurement initiatives and ongoing drives to increase competitiveness in terms of costs, efficiencies and yields,” said Tongaat Hulett. “Although the small 2007 crop will affect results in the first half of 2008, a reasonable local sugar crop this year and higher international sugar prices will have significant benefits for results in the second half. “Electricity cogeneration supply agreements are likely to be concluded. In Zimbabwe, we’ll be focused on restoring local prices to regional equivalents and on a full available capacity utilisation of 600 000t/year, with particular emphasis on working with and increasing supplies of cane from outgrowers.” – Lloyd Phillips