Tongaat Hulett sugar output increases 9%

Published: 27 November 2018
TONGAAT Hulett's revenue for the six month period ended 30 September 2018 increased by 29 percent to $93,2 million up from $72,4 million during the corresponding period in 2017 underpinned by a spike in sugar production.

The Zimbabwean unit at Hippo Valley Estates registered increased sugar output by nine percent to 153 343 tonnes during the period compared to 140 174 tonnes during the same period last year. The country's sole sugar manufacturer attributed the increase in output to improved yields averaging 115 tonnes cane per hectare.

In unaudited interim results for the period under review, Tongaat Hulett pointed out that total cane deliveries to the mill increased by 11 percent to 1,2 million tonnes compared to one million in the similar period in 2017.

"Sugar production for the period increased by nine percent to 153 343 tonnes (2017: 140 174 tonnes) on the back of improved company yields averaging 115 tonnes cane per ha (2017: 82 tonnes cane per ha) attributable to improved availability of irrigation water and sustained focus on variety optimisation and best farming practice," said the Johannesburg Stock-Exchange-listed group.

Of the total cane deliveries to the mill during the period under review, the company's own cane amounted to 733 036 tonnes compared to 575 482 tonnes during the same period last year. During the period under review, private farmers collectively delivered 471 920 tonnes while last year in the same period, the private farmers delivered 506 158 tonnes. In the half-year to September 30, 2018, Tongaat Hulett's operating profit amounted to $10,1 million compared to $8 million during the comparable period last year.

"Total revenue for the period increased by 29 percent to $93,2 million up from $72,4 million during the corresponding period in 2017 underpinned by increased sugar production (13 169 tonnes more than prior year), a 12 percent increase in domestic demand for sugar (205 809 tonnes sold compared to 184 191 tonnes in the comparative period) and competitive price realisations."

The sugar manufacturer, however, said the benefits of the positive factors were partially negated by inflationary pressures fuelled by shortages of foreign currency and speculative pricing activities by suppliers of production inputs.

Operating cash flow before working capital amounted to $23,6 million compared to $23,8 million during the same period last year.

"A total of $6,7 million was absorbed in working capital and deferred maintenance costs (2017: $1,7 million) arising from the increase in sugar stocks following the adoption of IFRS (International Financial Reporting Standards) 15. "Capex (Capital expenditure) and root planting costs totalled $5 million due to the reduced replanted area. The company posted a net cash position of $4,6 million at September 30, 2018 (2017: $204 000)," said Tongaat.

On the outlook, Tongaat Hulett projects that total industry sugar production for 2018/19 is expected to be between 450 000 tonnes and 460 000 tonnes compared to 392 000 tonnes achieved in 2017/18, increasing to over 500 000 tonnes in 2019/20.

It said this was premised on Tugwi-Mukosi Dam that was providing security of irrigation water for the next two years at optimum crop requirements.

"With adequate water, the industry will accelerate current efforts to maximize sugar production through yield improvement initiatives and new sugarcane development projects on some 4 000ha in partnership with private farmers, targeting full utilisation of installed industry milling capacity of 640 000 tonnes of sugar by 2020/21.

"Additional sugar production will support higher export volumes into high premium regional deficit markets with specific focus on East Africa," said the company.
- chronicle
Tags: Tongaat,

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