SOUTH AFRICA – Tongaat Hulett, the agricultural and agri-processing business has said that it expects operating profit to fall by at least 15% for the full year compared to year ended March 31, 2017 reports Business Day.
According to the company, the decline was a result of higher than expected sugar imports in South Africa.
As a result, the higher import volumes resulted in locally produced sugar being displaced and exported in the latter part of the year during a period of lower world prices and a stronger currency.
“The South African sugar operations experienced higher than anticipated import volumes into the local market as a result of inadequate duty protection that prevailed for a period,” according to the trading statement.
“The displaced locally produced sugar was exported in the latter part of the year and was impacted by lower world prices and a stronger currency.”
The company said that it expected headline earnings per share to drop by at least 30% in the review period.
Following the marketing update, its share price dropped 8% to US$6.77, its lowest point since early 2016, says Business Day.
For the year ended 31 March 2017, Tongaat Hulett’s operating profit rose 39.8% to US$184.27 million while revenue increased by 7.4% to US$1.41 billion backed by an improvement in sugar revenue.
During the period, starch operations were negatively impacted by maize costs that traded at import parity levels as a result of the past season’s drought.
The SA based company which also generates income from land conversion and development activities is focused on investments in sugarcane and maize processing facilities and a sizeable animal feeds thrust.
It operates in six countries in the Southern African Development Community (SADC) including Zimbabwe, Mozambique and Swaziland.