Wiseman Khuzwayo
Illovo Sugar, Africa’s biggest sugar producer, yesterday released sweet results for the six months to September and a trading statement for the year to March 2013.
Managing director Graham Clark said the 2012/13 sugar season had begun well, with production at the half year up 17 percent and half-year operating profit on a seasonal basis increasing to R854 million.
“We have continued to focus on enhancing efficiencies across our operations and have benefited from better market conditions for sugar. We expect this positive momentum to continue for the full year,” he said.
Illovo, which is majority owned by Associated British Foods, said on a seasonal basis, headline earnings for the half year increased from R289.2m to R377m, with headline earnings a share increasing by 30 percent to 82.1c a share.
It said on a seasonal basis, the contributions to operating profit were sugar production with 60 percent, cane growing 34 percent and downstream and co-generation 6 percent.
Country contributions were Malawi at 43 percent, Zambia at 23 percent, South Africa at 12 percent, Tanzania at 9 percent, Swaziland at 9 percent and Mozambique at 4 percent.
Clark said about 25 percent of the company’s cane was supplied by land claim beneficiaries, with Illovo having decided to sell its sugar cane areas to land reform about 15 years ago.
Illovo said recovery in South Africa had been significant, following excellent rainfall received in the early season growing period, followed by further rainfall at ideal intervals to sustain good growth in the recovering period.
Total cane harvested in this period from the group’s own estates reached 4.9 million tons compared with 4.3 million tons produced last year. A new record volume of group cane production is anticipated for the full season. Illovo said the performance of third-party growers that supplied its factories was also good.
It said initiatives to replant existing areas and develop new areas had produced encouraging results in KwaZulu-Natal and it was pleased to see these programmes gaining momentum. The benefits of upgraded irrigation and drainage, as well as the positive impact of new cane varieties, continued to underpin better yields outside of South Africa.
Abdul Davids, the head of research at Kagiso Asset Management, said South Africa was the biggest driver of the rebound in sugar production with a 30 percent increase in production to 583 000 tons.
He said: “This was driven by excellent rainfall and the reopening of Illovo’s Umzimkulu mill. The other regions were mediocre and Mozambique was disappointing, with adverse weather impacting the non-South African operations.
Shares slipped 1.82 percent to close at R30.20.