MOZAMBIQUE – Tongaat Hulett, a South African based diversified agribusiness firm, has unveiled intentions of closing down its sugar company in Mafambisse, central Mozambique.
According to the secretary of the Mafambisse trade union committee, Antonio Bassopa, Tongaat-Hulett is considering closing the plant following the current financial hurdles the company is experiencing making it impossible to continue operating the Mafambisse plant.
The losses were such that Tongaat Hulett believed it has no option but to pull out and has henceforth informed workers operating in the plant.
According to a Mozambique News Agency report, the company has already halted the production of cane to mill sugar in 2020 and is currently sourcing the raw material from the previous crop season.
Tongaat has said that it will keep its second Mozambican plantation and mill, at Xinavane in Maputo province, in operation.
The Mafambisse company is 85 per cent owned by Tongaat-Hulett, and 15 per cent by the Mozambican state.
Tongaat Hulett which also operates in Zimbabwe as Hippo Valley Estates Limited, has also deferred publishing of its periodic financial results to October 2019 pending conclusion of its financial review and associated forensic investigation.
The Johannesburg Stock Exchange listed sugar producer has also secured a voluntary suspension of the listing of its shares on the Johannesburg and London Stock Exchanges, while these reviews are completed.
“Hippo Valley Estates adopted the THL accounting policies and as such, any changes to the group accounting policies that may result from the THL accounting review of its financials are likely to impact the company’s financials,” it said.
“As a result the Board is performing its own internal review of the company’s financial statements to critically assess the company’s accounting policies in the context of dynamics in the local environment,” the company said.
Tongaat which appointed Gavin Hudson as chief executive in February this year, has also unveiled a new strategic review and restructuring, as it looks to retrench some 5 000 workers across its operations in the SADC (Southern African Development Community) region.
“The aim of the headcount review is to make sure that Tongaat has the right skills and experience to take advantage of its new operating strategy, which seeks to address its debt burden, streamline operations and fundamentally change its business model,” Tongaat said.
In the statement Hudson said the company’s operating environment had “changed almost beyond recognition” and that the business “simply hadn’t been able to adapt quickly enough to these changes with a business model outdated for a new economy”.
“This in turn meant a comprehensive rethink of the company’s business strategy in the immediate future.”
He added: “We have a burning platform and an opportunity to renew our business model. Returning the business to where it should be in the medium to longer term – operating strategically, sustainably, efficiently and profitably – will require a fundamental restructuring of the business.
“We will concentrate on our strengths, and closely review or move away from business practices where we are not strong.”