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JSE-listed Illovo Sugar has forecast more difficult trading conditions for the 2015/16 financial year in a statement advising shareholders of decreased earnings per share (EPS) and headline earnings per share (HEPS) for the year ended March 31.
The company expected revenue to be further negatively impacted by the recent sharp weakening of the euro, the full year effect of low European Union (EU) prices and persistent low world market prices driven by a weakening Brazilian real.
South African sugar production was also expected to decline as a result of the full impact of the previous season’s drought and frost conditions on the 2015/16 crop.
“However, increased growth in domestic and regional sugar markets and the weaker rand are expected to provide some partial relief from these challenging conditions,” noted the company.
Illovo said a “reasonable degree of certainty” existed that EPS and HEPS for the year ended March 31 would decline between 7% and 12% compared with the previous financial year.
The company attributed the fall mainly to challenging trading conditions in the EU, world and regional markets, and the impact of drought and frost on South African sugar production.
Illovo emphasised that it continued to make strategic investments, which were underpinned by a strong balance sheet and good cash generation.
This financial information had yet to be reviewed and reported on by the company’s auditors, while the company’s results for the year ended March 31 would be published on or about May 25.