Tongaat Hullet profits down

HARARE - Zimbabwe's largest sugar producer Tongaat Hullet says its operating profit for the half-year to September 2015 declined to

$19 million compared to $32 million recorded in the same period last year.

The group’s chief executive Peter Staude said despite the slump in profits, Tongaat’s domestic market sales volume levels have been maintained despite the challenging local economic conditions.

“This was more than off-set by lower export volumes, due to the timing of shipments between the first and second halves of the year, and lower export prices into the European Union. The strength of the US dollar is exerting pressure, particularly in respect of US dollar-based costs (such as wages and salaries) and Euro-based revenues,” he said.

Staude noted that the movement in the exchange rate has benefitted the conversion of the US dollar earnings into rands on consolidation.

This comes as the sugar producer reported an interim drop in diluted headline earnings per share of 13,6 percent to 584,8 cents for the period ended September 30, 2015.

The company, however, maintained its interim dividend of 170 cents per share despite a 5,7 percent drop in revenue to R7,609 billion.

Tongaat Hulett said difficult conditions for the sugar industry had affected the results. The conditions were, however, offset by strong performances from its land conversion activities and starch operation.

“Land conversion yielded R576 million from the sale of 65 developable hectares,” Tongaat Hulett said.

The company said sugar revenue dropped 14 percent to R5 billion during the period due to the lower international sugar price.

On its outlook, the company said it had “enhanced its strategic positioning over the past few years” and would continue to do so, focusing on “multiple strategic thrusts”, which would improve earnings and cash flow.

It said the current full-year financial results would be affected by “varying dynamics, both positive and negative”, making its final position by year-end “difficult to predict”.

Tongaat Hullet has operations in South Africa, Mozambique, Swaziland and Zimbabwe.

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