Tongaat Hulett up 74,6%

2009-08-04 00:00

THE KZN-based agricultural and agri-processing giant Tongaat Hulett yesterday recorded a strong set of half-year interim results for 2009, with headline earnings rising 74,6% to R440 million.

The group is benefiting from being appropriately diversified, with a focus on sugar, starch (& glucose) and agricultural land conversion.

Tongaat Hulett chief executive officer, Peter Staude, told The Witness that the JSE-listed group increased operating profit for the sixth consecutive year (it almost doubled year on year), on the back of a strong showing by its sugar operations in Mozambique and South Africa, as well as a consolidation of its Zimbabwe (sugar) operations.

A stronger world sugar price was a key feature of the perfor­mance and Staude believes that many people are rightly bullish about the future strength of the sugar price.

Staude stressed that the group is extremely well placed to capitalise on the changing world of agriculture characterised by increasing global food demand and renewable energy demand.

The Mozambique sugar operation was a key feature of the results, as profit from operations in that country increased to R134 million from R77 million.

The group’s expansions in two facilities in Mozambique (Xinavane and Mafambisse) are expected to ramp up production significantly in the second half of this year — increasing overall 2009 production to more than double the 2008 level.

“We made big investments in Mozambique … but we have operations that have enormous cash generation [capabilities].”

The restoration of certain key economic fundamentals in Zimbabwe lifted Tongaat’s profit in that country to R305 million.

Staude said their ultimate aim is to double sugar production in Zimbabwe up to the 600 000 ton-level.

The group’s starch operations were slightly firmer, with profit up 8,7% to R112 million.

However, profit from agricultural land conversion and development declined to R64 million from R115 million.

Most of the activity centred on the sale of developable land for affordable housing in the eThekwini growth corridor.

However, Staude stressed that land conversion is a long-term process.

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