Illovo profits increase

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Illovo Sugar has reported an 18% rise in diluted headline earning per share to 132.5 cents in the year ended March 2012, from 112.1 cents a year earlier.

Group turnover grew by R1.1 billion to R9.2 billion, while sugar sales volumes fell by 5% as a consequence of the lower sugar production.

However, the group operating margin increased from 12.7% to 14.7%, resulting in a 31% increase in operating profit from R1.03 billion to R1.35 billion.

The contributions to operating profit were sugar production 59%, cane growing 30%, downstream and power generation 11%. The country contributions were Malawi 39%, Zambia 33%, Tanzania 11%, South Africa 7%, Swaziland 6% and Mozambique 4%.

Illovo's total dividend was up 18% to 66.0 cents.

“We are pleased to report much improved results for the year with operating profit up 31% and headline earnings per share up 18%. Production prospects for the group are positive with increased areas under cane and a return to more normal weather,” said Illovo managing director Graham Clark.

“Market conditions remain buoyant. The termination of our involvement in a potential greenfield project in Mali is disappointing but provides an opportunity to re-deploy a very experienced project team elsewhere in the group to pursue other growth opportunities.

Group sugar production fell in total by 7% in 2011/12, from 1.639 million tons to 1.526 million tons.

In South Africa, the drought-impacted reduction was again material with sugar production being some 24% below 2010/11. The reduction in South Africa was only partially offset by increased sugar production in Malawi, Mozambique and Swaziland, while small reductions were recorded in Zambia and in Tanzania, where an abnormally wet season restricted factory throughput.

Looking ahead, the company said current 2012/13 season should see a new record volume of group cane production.

Sucrose levels look set to be more normal with early season trends supporting this likelihood. “Therefore, an increase in anticipated sugar production is expected from a better season in South Africa, and further increases elsewhere in the group. Market opportunities remain positive and an ongoing focus on lowering costs of production should limit the impact of inflation on the group cost base,” the company said. - I-Net Bridge

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