Local sugar producer Tongaat Hulett expects its operating profit for the year ended March 31 to rise by 40% to R2.3-billion, owing to improved market prices, more effective import protection dynamics in the countries where it operates and higher prices realised for exports.
The various sugar operations generated operating profit of R1.27-billion, compared with a loss of R15-million in 2016 – reflective of improved local market prices.
This improvement came despite sugar production volumes, totalling 1.06-million tonnes, being impacted by low cane yields owing to the drought experienced in KwaZulu-Natal and poor growing conditions with low rainfall and restricted irrigation levels in Mozambique and Zimbabwe.
Further, the company noted that its headline earnings were expected to be about R982-million, compared with the R679-million earned in the previous year.
However, Tongaat pointed out that its starch operations were negatively impacted by maize costs that traded at import parity levels as a result of the past season’s drought . Sales concluded in land conversion and developments in the year were also lower than the prior year.