Sugar production: Tongaat Hulett sees recovery
Tongaat Hulett expects a full sugar production recovery to take two years because of the severity of the drought.
|||Johannesburg - South Africa's Tongaat Hulett posted a 3.7 percent rise in half-year profit on Monday, in line with its forecast, citing higher international prices and effective import protection.
The sugar producer said that headline earnings per share, which strips out certain one-off items and is the main profit measure in South Africa, rose to 546.7 cents for the six months to September 30 from 527.4 cents in the same period last year.
Operating profit from sugar operations increased by 73 percent to R825 million ($56.98 million).
“This is reflective of improved local market prices, more effective import protection dynamics in the countries where Tongaat Hulett produces sugar and higher international prices, including for exports into regional African markets and the EU,” the company said.
Tongaat remains affected by the the driest year on record, it said, estimating that 2016/17 sugar production will be between 1 million tons and 1.1 million tons, against 1.02 million tons last year.
The company expects a full sugar production recovery to take two years and to reach levels of between 1.2 million tons and 1.3 million tons in 2017/18, based on improved rain forecasts in key growing areas.
Southern Africa, where Tongaat has its mills, was affected by a severe drought that cut production of crops ranging from maize to sugar.
“Given ongoing average to above-average rainfall and a recovery of key dam levels, total sugar production is expected to recover over two years,” the company said.
Tongaat will pay an interim dividend of 100 cents per share, down 41 percent from last year.
The company's share price was up 1.2 percent at 07h50 GMT.
REUTERS