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Tongaat profit hit by drought

Johannesburg - Tongaat Hulett [JSE:TON], a producer of sugar and starch, on Monday reported a 4% drop in full-year profit, hit by a drought in South Africa, but said it expects earnings to rise in the year ahead.

Tongaat, which has operations in South Africa, Mozambique, Zimbabwe and Swaziland, said diluted headline earnings per share for the year to the end-March dropped to 739.6 cents, compared with 772.7 cents a year earlier.

Headline EPS is the main profit gauge in South Africa and excludes certain one-time items.

Full-year revenue rose to R9.681bn from R8.789bn the previous year.

Raw sugar prices have fallen some 40% after hitting a 30-year high of 36 cents in early February, with most of the losses inflicted during a broad commodity selling spree that struck the sweetener over the past two weeks.

Tongaat said progress towards fully utilising its installed sugar milling capacity of some 2 million tonnes per annum was hampered by the severe drought in the 2009/10 growing period in South Africa, coupled with poor growing conditions in Mozambique in the early part of 2010.

The company said it expects to increase its Mozambique sugar output by more than 50% to 250 000 to 270 000 tonnes during the 2011/12 season, while Zimbabwe output is expected to rise to between 360 000 to 380 000 tonnes.

Its South African production is also expected to rise.

"Considerable growth in profit from operations is expected in the year ahead," the company said in a statement.

The company, which also has interests in land management and property development, declared a final dividend of 140 cents.
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