Economic headwinds weigh down Tongaat Hulett’s performance widening its headline loss to US$75m

SOUTH AFRICA – Sugar producer Tongaat Hulett, has posted a wider headline loss of R1.1 billion (US$75m) for its financial year ending March 31, 2021, compared to a headline loss of R285 million (US$19.5m) for the prior full-year.

This saw the South Africa headquartered group, which was rocked by an accounting scandal involving former executives just over two years ago, reporting a headline loss per share of 822 cents, a dip from 211 cents of 2020.

The company attributes the decline in performance to South Africa’s broader Covid-19 economic fallout last year and continued hyperinflation in Zimbabwe.

Despite the ongoing hyperinflation effects, the Zimbabwean operations are significant and continued performing well.

The organization notes that the Mozambique sugar operations delivered solid results, almost doubling its operating profit.

The company’s full-year revenue from continuing operations (excluding its disposed starch operations) fell 3% to R14.9 million (US$1.01m), compared to R15.4 billion (US$1.05 billion) in 2020.

Tongaat hulett’s revenue from continuing operations fell 3% to US$1.01m

Its operating profit for the period saw a 44% plunge, to R1.8 billion (US$123m) from R3.25 billion (US$222m) in 2020.

Cash generated from operations came in at just over R1.8 billion (US$123m) compared to R2.3 billion (US$157m) for the prior year.

“There were a few dominant causes for the reduction in headline earnings, with two thirds of the impact arising from hyperinflation in Zimbabwe and the reduction in property sales, with the refinery loss and others making up the remaining third,” Tongaat Hulett noted in a statement.

However, the group maintained that its turnaround remains on track as it managed to slash its debt by almost half during the financial year.

Tongaat Hulett’s turnaround plan commenced two years ago and is centred around improving governance and control, debt reduction and repositioning the business as a sustainable entity, whilst protecting overall employment.

Successful asset disposals, as well as stringent cash flow management and cost reduction efforts supported a 42% reduction in debt levels during the year.

Commenting on the latest financial performance, Tongaat Hulett CEO Gavin Hudson said, “The results are presented against a backdrop of unprecedented and challenging times triggered by the Covid-19 pandemic. Our focus has been on continuing operations and the safety of our people,” he noted.

“Although tangible progress has been made, we continue repairing and rebuilding what was a fragile organisation, with remnants of substantial debt, constrained cash flows, and a legacy of poor operational and cultural practises which has been challenging to navigate,” added Hudson.