Tongaat strong

2008-08-04 00:00

The KwaZulu-Natal-based agri-processing giant, Tongaat Hulett, increased profits from operations to R443 million in the first six months of 2008 from R308 million in 2007, the JSE-listed group said yesterday.

Headline earnings were R252 million compared with a loss of R155 million in 2007, affected by corporate structuring transactions.

However, Tongaat expects profit growth from operations for the full year to come in lower than for the first six months.

CEO Peter Staude told The Witness yesterday that improved maize crops coupled with better world maize prices increased profits in its starch operations to R103 million in the first half of 2008 from R37 million in 2007, according to interim results.

“It is good for business when we get competitive prices,” Staude said, adding that South Africa has every opportunity to produce and export more, depending on the weather.

Tongaat’s business consists of land management, property development and agriculture.

Revenue has increased by 28% to R3,1 billion so far this year, while profit from operations increased by 44%.

Profit from its sugar operations grew to R253 million from R167 million in 2007, supported by its five major operations in Mozambique, Zimbabwe and Swaziland. It expects to expand in Mozambique and to strengthen South African sugar production in the coming months.

The company has substantial land holdings near the new international airport at La Mercy and plans to roll out several developments in the area. The developments may take the form of retirement villages, hotel sites, logistics facilities, industrial development and affordable housing.

Land developments contributed R130 million to company profits, including capital profit of R15 million. Staude said this performance was driven by fewer but more profitable sales.

Tongaat said it is also fast-tracking the planning of renewable power generation at four of its eight sugar mills in the region, amid predictions that electricity demand in South Africa will exceed generating capacity in the next five to seven years.

The board has declared an interim dividend of 160 cents per share.

kavith@witness.co.za

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