No sugarcoated results as economic challenges weigh on Tongaat Hulett recovery

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The Cornubia development. Source: Tongaat Hulett
The Cornubia development. Source: Tongaat Hulett
  • Tongaat Hulett noted in its results that its losses rose to R1.1 billion from R285 million in 2020.
  • The group said revenue went from R15.3 billion in 2020 to R14.9 billion this year.
  • Mozambique sugar operations almost doubled operating profit, and Zimbabwe sugar operations remained steady.



Troubled sugar producer Tongaat Hulett announced a 3% reduction in revenue and 44% reduction in operating profit in its results, specifically noting that losses rose to R1.1 billion from R285 million in 2020.

The group released its results for the year ended in March 2021 on Tuesday morning. Tongaat Hulett's share price hovered at R79.50 in the morning. In April, the share price tanked 20%.

Its results come out the same day the the company told The Witness that it was shutting its mills on the North Coast in KwaZulu-Natal due to the widescale looting and destruction in the province in the wake of the arrest of former president Jacob Zuma. 

The sugar producer has been struggling to get back on its feet after it was rocked by an accounting scandal that led to findings that it inflated its financials by almost R12 billion. In addition to debt reduction, Tongaat was focusing on governance as part of its restructuring process.

The group said that with the governance challenges in recent years and the headwinds of the Covid-19 pandemic, revenue went from R15.3 billion in 2020 to R14.9 billion this year.

"Deals under negotiation were also halted or abandoned due to the uncertain economic environment, resulting in a material reduction in revenue and profit from the operation," the company said.

The results highlighted a 42% reduction in group debt from disposals. The group also reduced costs, made working capital improvements and focused on operational efficiencies.

The results said Mozambique sugar operations almost doubled operating profit, and the performance of the significant Zimbabwe sugar operations remained steady.

"The South African sugar operations experienced a challenging second half of the year, while Covid-19 related challenges resulted in a material reduction in the revenue and profits of the property business," the results said.

The results said while inflation in Zimbabwe was slowing, the impact of hyperinflation accounting continues to affect on reported profits, offset by a reduction in the non-taxable net monetary loss to R626 million from R1.2 billion last year.

"The net effect of the factors above is a loss from continuing operations of R628 million from R137 million in 2020.

Earlier this year, Tongaat Hulett concluded the sale of its Umhlanga property to Balwin Properties for R167 million. Profit from discontinued operations includes the contribution from the starch operation for the 7 months until 31 October 2021, which is the date on which the transaction was concluded," the results said.

However, the group pointed to land sales delays, the Covid-19 pandemic, hyperinflation in Zimbabwe and the disposal of starch operations in Namibia and Eswatini as factors that weighed results down.

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