Drought hits Tongaat Hulett’s revenue
Johannesburg – Tongaat Hulett yesterday reported that its interim results had dropped as the worst drought in 23 years cut output.
The group, which is South Africa’s biggest sugar producer by market value, was also affected by the failure to sell off tracts of prime land in a single block as it had anticipated.
Tongaat chief executive Peter Staude said if the next six to seven months failed to produce enough rain, the impact of the drought would spread to the group’s performance for the 2017 financial year.
“Everybody knew that and we have been saying it for some time that we would have low sugar production this season in KwaZulu-Natal. And obviously when you produce half of what you normally produce, you look really hard at all your costs. We ran the season with three out of four mills running.
“Under the circumstances, we are quite pleased with where we ended up,” Staude said after the release of the interim results for the six-month period to September.
“This has been the driest period in probably a century,” Staude said.
South Africa’s worst drought since 1992, caused by the El Niño weather pattern, has cut production of crops including wheat and maize, as well as sugar.
In its results, the group said in total, for the six months to September, revenue amounted to R7.6 billion, down 5.7 percent from R8bn in the comparable period last year. Operating profit of R1.4bn was 9.9 percent below the R1.5bn from the comparable period last year. Headline earnings of R673 million were 12.9 percent lower than the R773m recorded last year.
