JSE-listed Tongaat Hulett’s results for the year ended March 31 showed continued progress in the turnaround strategy, notwithstanding some headwinds along the way and a challenging trading environment arising from the Covid-19 pandemic, the company says.

Revenue from continuing operations decreased by 3% year-on-year to R14.92-billion, while operating profit from continuing operations declined by 44% to R1.82-billion.

The group’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) from continuing operations was R2.50-billion.

Lower headline earnings were mainly the result of hyperinflation in Zimbabwe and the reduction in property sales.

The Mozambique sugar operations delivered a good performance, with significant revenue growth on the back of ten-year-high local sugar sales.

The Zimbabwean operations continued to perform well, with R323-million in dividends received from Zimbabwe during the year under review.

The South African operations delivered a strong performance, with sales volumes up 15%; revenue 3%; and refining production 39%, while average working capital management reduced 44%; and market share strengthened.

Property operations were the most impacted by the Covid-19 pandemic. About R215-million in deals were successfully concluded. The group also continued fulfilling legacy infrastructure obligations but Covid-19 resulted in Deeds office delays and delayed or cancelled deals owing to market uncertainty.

The South African sugar operation’s performance was, meanwhile, also negatively impacted on by a one-off refinery loss, the group notes.

It made a decision to ramp up the local refinery output in response to significantly higher demand. This decision increased the group’s local sugar production by 39% over the yearly plan, to exceed 450 000 t.

While this improved local supply and mitigated potential deep-sea imports, this extra throughput unduly pressured the refinery, leading to increased production costs and process inefficiencies that resulted in a loss of about 27 000 t of sugar.

Steps have been taken to rectify and enhance the refinery processes and prevent a reoccurrence and the learnings have been taken throughout its operations, Tongaat says.

The business made significant progress in its efforts to reduce debt, decreasing net debt by 42% from R11.35-billion to R6.57-billion, through the successful conclusion of several asset disposals, as well as reduced costs and improvements to the working capital cycle.

Tongaat also finalised the refinancing of its South African debt and signed credit-approved term sheets to conclude its Mozambican debt restructure, creating greater certainty in terms of funding.

Tongaat says it remains committed to large and small-scale empowerment farming.

“We have intensified our focus on environmental, social and governance, fundamentally reviewing and restructuring this framework, improving monitoring, measurement and environmental risk management,” the company states.

Focused efforts on safety have resulted in a 13% reduction in the lost-time injury frequency rate and lost-time injury rate.

Tongaat’s environmental efforts have shown ongoing improvements in key metrics, including reducing hazardous waste, while it continues to maximise the use of alternative fuels to reduce carbon emissions, the group notes.

The company has submitted all relevant information and continues to cooperate with regulators in South Africa and Zimbabwe to assist with the criminal investigations and civil claims against former executives with regard to the PwC forensic investigation, it says.

“Our turnaround plan commenced just under two years ago, and our efforts continue to yield positive results, despite some headwinds along the way. The results are presented against a backdrop of unprecedented and challenging times triggered by the Covid-19 pandemic. Our focus has been on continuing operations and the safety of our people. 

“Although tangible progress has been made, we continue repairing and rebuilding what was a fragile organisation, with remnants of substantial debt, constrained cash flows, and a legacy of poor operational and cultural practices which has been challenging to navigate.

“We remain confident that the ongoing execution of our strategy will enable the achievement of our business objectives,” CEO Gavin Hudson says.