Cape Town - Agriculture and agri-processing business Tongaat Hulett [JSE:TON] announced a 5.7% revenue drop in its half-year results for the six months to end-September 2015.
The company announced on Monday that in total, for the six months, revenue amounted to R7.6bn (2014: R8.073bn) and operating profit fell by 9.9% to R1.361bn (2014: R1.510bn).
Land conversion and development activities generated operating profit of R576m from the sale of 65 developable hectares (2014: R435m from 49 developable hectares).
Revenue from the various sugar operations totalled R5.0bn for the six months, 14% below the previous half-year. Profit before the impact of cane valuations was R1.13bn, compared to R1.45bn in the first half of last year.
Operating profit after cane valuations, from all the sugar operations, totalled R562m compared to R864m in the first half of last year.
South African sugar operations, including the agriculture, milling, refining and various downstream activities, saw an operating profit drop to R154m (2014: R259m). The drought in KwaZulu-Natal (including the Darnall mill not being opened this season) resulted in a substantial decrease in production volumes compared to last year. Because of this, sales volumes fell by 88% compared to the same period last year.
The company generated R2.3bn (2014: R2.4bn) operating cash flow for the six months before working capital movements. Capital expenditure for the half-year rose with high return initiatives being undertaken and after taking all factors into account, net debt at the half-year stood at R5.27bn (2014: R4.90bn).
Headline earnings for the half-year amounted to R673m (2014: R773m). The interim dividend remained unchanged at 170 cents per share.
Tongaat Hulett CEO Peter Staude said the results for the half-year ended September 30 2015 were attained with strong performances from the land conversion activities and the starch operation being more than off-set by the impact of difficult conditions for the sugar industry.
In its outlook for the future, the company said: "The financial results for the current full year continue to be influenced by a number of substantial and varying dynamics, both negative and positive, and the full impact is difficult to predict at this stage."
By midday Tongaat Hulett shares were trading at R108.72, 1.16% down on the previous session's close.