Tongaat Hulett’s financial results point to recovery in sugar activity

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Tongaat Hulett reported a significant improvement in its financial statements for the six-month period ended September 30, 2020, largely due to a strong performance in the company’s sugar operations. Photo: FW Archives

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

For the period under review, continuing operations recorded a 37% increase in revenue to 8.2 billion rand (H1 2019: 6 billion rand), a 95% increase in operating profit to 1 , 9 billion rand (H1 2019: 973 million rand) and a 127% increase in earnings before interest, taxes, depreciation and amortization to 2.5 billion rand (H1 2019: 1.1 billion rand).

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

“Most importantly, the restructuring and revitalization of our group over the past two years has allowed us to thrive in this challenging environment, supported by a lighter, more useable platform that allows us to weather the storm. To date, the focus on improving our cash generation and reducing debt has resulted in a significant reduction in debt levels. Several disposals of key assets were successfully completed during the period, ”they said.

In the first half of 2020, Tongaat Hulett’s sugar operations in South Africa, Mozambique, Zimbabwe, Botswana, Namibia and Swaziland collectively generated operating profit of R 2.13 billion (H1 2019 : 855 million rand).

However, this significant improvement was compromised by operating profit losses of -47 million rand (H1 2019: 243 million rand) in the real estate business of Tongaat Hulett and -169 million rand in additional expenses by its corporate structure (H1 2019: -125 million rand).

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

Efficiency gains and cost savings, as well as some one-off costs required to implement the turnaround strategy, have contributed to the “good overall performance” of the various sugar operations.

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

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