Tongaat records $17m profit

HARARE - Zimbabwe's largest sugar producer, Tongaat Hulett (Tongaat), reported a 27 percent jump in operating profit in the year to March 31, 2018 from $13,4 million to $17 million buoyed by continued growth on the local market.

The sugar producer’s company secretary Bigboy Shava yesterday said the local market growth was a direct result of Tongaat’s refineries which increased availability of refined sugar into the market.

“As a result, total industry sales of 334 000 tonnes from 301 000 tonnes in 2017 were realised in the local market, an increase of 11 percent,” he said.

Revenue for the year under review at $137 million contracted eight percent to $137 million from $148,5 million recorded prior comparable year as a result of a 14 percent decrease in sugar production to 197 000 tonnes down from 229 000 tonnes prior comparable period.

Shava also pointed out that the timely intervention by government to protect local industry against competition from dumped world market imports continued to yield positive results in addition to providing job security in the industry.

Highlighting that total industry exports to the US and regional markets decreased to 58 000 tonnes (2017: 153 000), a decrease of 95 000 tonnes due to decreased production and increased local sales.

“The favourable sales mix achieved in the domestic market resulted in an average mill door price for the season of $626/tonne (2017: $578/tonne), an 8,3 percent overall increase.

Operating cash flow — after working capital movements – was down by about $5,6 million to $32,3 million in line with the reduction in revenue as cash generated from operations amounted to $23,5 million down from $38 million recorded prior comparable period.

In the year under review, the company’s debt amounted to $3,1 million which was a 61 percent improvement on prior year level of $7,9 million.

A total of $3 million compared to $4,4 million last year was incurred in finance costs commensurate with the level of borrowings, all of which were unsecured, at an average interest rate of 7,97 percent.

An attributable profit of 5,72 cents per share was achieved for the year compared to 3,98 cents per share realised in the prior year.

This comes as the company recently opened up over 15 000 hectares (ha) of additional preparation area earmarked to be irrigated by water from Tokwe-Mukorsi Dam.

In a move likely to see the firm increase its production, the sugar producer earlier this year called for interested parties to tender for conventional land preparation for ten plots owned by subsidiaries, Hippo Valley and Triangle.

This will be an addition to the group’s current 13 927 hectares at Triangle Estate, the 4 650 hectares at Mkwasine and 1 916 hectares at Mwenezana.

This comes in the wake of a sugarcane plantation expansion drive in which 4 000ha were being developed for more than 200 out-grower farmers in Chiredzi under the firm’s Kilimanjaro Project.

Tongaat has said it is banking on the newly completed Tokwe-Mukorsi Dam to increase production.

 

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