Tongaat Hulett’s financials point to sugar business recovery

Tongaat Hulett’s ailing fortunes in recent years appear to be on a trajectory of recovery, judging by its recently released interim financial results for the first half-year ended 30 September 2020 (H1 2020).

For the period under review, continuing operations reported a 37% increase in revenue to R8,2 billion (H1 2019: R6 billion), a 95% increase in operating profit to R1,9 billion (H1 2019: R973 million), and a 127% increase in earnings before interest, taxes, depreciation, and amortisation to R2,5 billion (H1 2019: R1,1 billion).

In a joint statement, Tongaat Hulett’s chairperson, Louis von Zeuner, and CEO, Gavin Hudson, said it was fortunate that the majority of the company’s businesses were classified as essential services during COVID-19-related lockdowns in the countries in which it operates.

“Crucially, the restructuring and reinvigoration of our group over the past two years has permitted us to thrive in this challenging environment, supported by a leaner, fit-for-purpose platform from which to weather the storm. To date, the focus on improving our cash generation and reducing debt has resulted in a considerable reduction in debt levels. Several key asset disposals have successfully been concluded during the period,” they said.

During H1 2020, Tongaat Hulett’s sugar operations in South Africa, Mozambique, Zimbabwe, Botswana, Namibia, and Swaziland collectively generated R2,13 billion operating profit (H1 2019: R855 million).

However, this significant improvement was undermined by operating profit losses of -R47 million (H1 2019: R243 million) in Tongaat Hulett’s Property business and -R169 million in added expenditure by its corporate structure (H1 2019: -R125 million).

Von Zeuner and Hudson said improvement across the company’s sugar business was attributable to a strong turnaround in the South African operations, a good operational performance in Mozambique, steady operations and adjustments for hyperinflation in Zimbabwe, as well as the profit on the disposal of the Namibian packaging operation.

Efficiency improvements and cost savings, together with certain once-off costs necessary to implement the turnaround strategy, contributed to the “overall solid performance” of the different sugar operations.

“Tongaat Hulett continues to implement decisive steps to become a more profitable and sustainable business. We are encouraged that the extensive initiatives that we have implemented are beginning to translate into improved financial performance. We are determined to continue to lay the groundwork for Tongaat Hulett’s successful return to sustainable value creation for our stakeholders,” they added.

This article was republished from Farmer’s Weekly with permission 

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