Sugar expected to yield sweet profit for Tongaat Hulett
Tongaat Hulett expects to report a R1.35-billion operating profit for the six months to September 30, a 5.8% increase on the R1.27-billion recorded in the six months to September 2015, owing to strong performance in its starch operations.
Headline earnings for the six months under review are expected to increase to R631-million.
Operating profit from the various sugar operations is expected to reach R825-million for the six months under review, nearly double the operating profit posted in the prior comparable period, reflecting improved market prices and more effective import protection dynamics in the countries where Tongaat Hulett produces sugar, as well as higher international prices.
However, overall volumes are still being affected by lower cane yields owing to the severe drought in KwaZulu-Natal and poor growing conditions with low rainfall and restricted irrigation levels in Mozambique and Zimbabwe, as a result of low water and dam levels.
Sugar production started later in the current season than the year before and is expected to reflect higher production levels in the second half of the year.
In its starch and glucose operation, Tongaat expects an increase in operating profit to R306-million. The business benefited from a better sales mix and from own production for the coffee and creamer sector replacing imported product.
Overall volumes remained flat as a result of muted domestic consumer demand. Higher maize costs during the period were partially offset by higher coproduct revenues and ongoing cost control.
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