Making all the right moves

2012-11-16 00:00

THE provincial sugar industry has rebounded well from the 2011 drought-stricken season, with Illovo Sugar having successfully re-established cane-planting in certain areas.

Furthermore, the JSE-listed, KZN-based company has successfully facilitated the establishment of new cane-growing areas.

Strong profit growth

Illovo yesterday reported seasonal headline earnings per share growth of 30,5% to 82,1 cents for the six months ended September 30, on the back of 17% growth in sugar production. Sugar sales grew by 10% year on year.

Illovo is Africa’s largest producer of sugar. The company also boasts a leading 30% market share in South Africa.

Local operations back on track

MD Graham Clark told The Witness yesterday that its South African operations — including its four production sites in KZN, located in Eston, Noodsberg, Sezela and Umzimkulu — have improved their performance.

Crushing at its Umzimkulu factory is now back on stream following a disruption due to the drought.

“The past two years have been a tough time with the drought. Since then we have worked on better management of cane areas … and a cane project for growers in order to re-establish operations in certain areas,” Clark said.

Private-public partnerships

He added that they have worked closely in partnership with the government to enhance the viability of small-scale growers and other previously-disadvantaged farmers — with a total of more than R215 million worth of direct government funding being channelled to this sector over the past three years or so.

“The government has identified us as a key partner in ensuring that the cane industry remains viable.”

The recent rains have bolstered production for the current season, as well as prospects for next season.

Major local investment

Illovo is in the process of setting up a giant state-of-the-art warehouse worth more than R300 million in Willowton, Pietermaritzburg.

Clark said the development, which is expected to be completed in the second quarter of next year, will address a range of issues related to input costs.

“We are about 60% through the project. We did an intense study on our South African supply chain.

“We decided to locate the distribution centre in the middle of our production and supply ring. It’s a significant investment … and will address various cost efficiencies.

“We produce sugar over nine months instead of 12 months, so storage is critical for us. Currently, we store sugar all over the place.

“For instance, it is stored in Durban, and then transported past a centre of production on its way to Johannesburg.

“We are basically consolidating eight or nine warehouses into one.”

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