ZIMBABWE – Zimbabwe’s largest sugar producer, Tongaat Hulett, production declined by nine percent to 445 000 tonnes in the full year to March 2015 compared to 488 000 registered in the prior period due to low dam levels.
Peter Staude, Tongaat Hulett group chief executive said the decline in sugar cane production was also as a consequence of no cane being diverted from the independent ethanol plant at Chisumbanje and after experiencing the impact of low dam levels for irrigation at the end of 2013, which only recovered in 2014.
“The Zimbabwe sugar operations operating profit for the year amounted to $35 million compared to $33 million last year,” he said.
Staude noted that local market sales volumes recovered significantly with improved local market protection — tariffs and import licences — implemented earlier in the year.
The South Africa-based company owns Hippo Valley and Triangle sugar milling and estates in Zimbabwe’s Lowveld.
The two sugar mills have a combined installed milling capacity to crush in excess of 4,8 million tonnes of cane annually and produce over 640 000 tonnes of sugar.
Staude, who indicated that Zimbabwe’s market remained suppressed by macro-economic conditions, said Africa’s leading sugar producer will continue to implement cost-cutting measures.
“The sustainable costs reductions achieved over the past two years, while having to absorb input price increases, provide a good base for the next steps in the concerted cost reduction process in the sugar operations,” he said.
Tongaat Hulett operates in about 27 locations in six countries — South Africa, Botswana, Namibia, Swaziland, Mozambique and Zimbabwe.
In the period under review, the group’s South Africa operations were down to 541 000 tonnes from 634 000 tonnes in the comparable period, while Mozambique was up 271 000 tonnes from 249 000 tonnes.
Raw sugar equivalent in Swaziland was 57 000 tonnes compared to 53 000 tonnes previously. The reduction in sugar volumes and lower prices in the 12 months to March saw Tongaat Hulett recording a 14,6 percent drop in headline earnings to $94, 5 million
The sugar producer said total sugar output in the year to March slipped to 1,314 million tonnes from 1,424 million tonnes, affected by dry conditions in KwaZulu-Natal.
World sugar prices declined further, with global stock levels having increased following favourable weather conditions in many sugar-producing regions of the world.
The group’s revenue was up just 2,8 percent to $1, 615 billion, but operating profit dropped 12 percent to $0,2 billion. A final dividend of $0,21 per share was declared.
The company said the results in the year ahead “would be influenced by a number of dynamics, the magnitude and impact of which were difficult to predict at this stage”.