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SA contribution to Hulett sugar profit reduced

Tongaat Hulett CEO Peter Staude said SA could reclaim its number one spot as soon as it closed the gap between the hectares under cane and the hectares milled

EVEN after drought in Tongaat Hulett’s operations in SA had ended, Mozambique and Zimbabwe contributed about 60% of its sugar profit based on growing operations in the two countries, the agribusiness said in its interim results yesterday.
Tongaat Hulett CEO Peter Staude said SA could reclaim its number one spot as soon as it closed the gap between the hectares under cane and the hectares milled. This remained unusually large due to the delayed cane root planting after last year’s drought. It would take about 15 months before the first harvest after planting.
Mr Staude said the future revenue stream would benefit significantly from electricity and ethanol developments. However, in the meantime it was consulting the government about establishing an appropriate regulatory framework for both electricity generation and ethanol production from sugar cane.
Revenue jumped 27,6% to more than R6bn during the six months ended September, but operating profit grew a more modest 8,7%, to R1bn. Tongaat Hulett said last year’s operating profit was inflated by a R130m gain from a pension fund surplus. Excluding th is, operating profit rose about 25,7%.
Operating profit in agriculture, sugar milling and refining operations in SA for the half-year was R54m, compared to R47m in the six months to September last year. Revenue was also generated from 13 developable hectares (15 gross hectares) sold in the Umhlanga Ridge Town Centre, Zimbali and Izinga areas. Operating profit of this unit amounted to R62m compared to R97m, with a further R3m in capital profits compared to R4m previously realised.
Abdul Davids, head of research at Kagiso Asset Management, said the drought of last year was severe . "We think that even with the recovery, SA is still significantly below a normal level of production and profitability."

HOPEWELL RADEBE , Business Day - 15 Nov 2011