Johannesburg - Illovo Sugar on Wednesday reported diluted headline earnings per share of 210.6c for the year ended March 2009 from 170.5c a year ago.
A final dividend of 64.5c per share was declared, for a total distribution of 106c for the full year, compared with 85.5c per share a year ago.
Revenue was up 27% at R8.602bn, while operating profit grew 30% to R1.386bn.
MD Graham Clark said: "These are good results overall, with increased earnings and higher production achieved. The company continues to make significant investments to grow its productive capacity, as part of which the major expansion project in Zambia was completed in April.
"Production in the ensuing year is anticipated to reflect a
further increase, and the group is well positioned to benefit from duty-free, quota-free access to the EU sugar market from October."
The group's profits benefited from improved domestic market sales, higher world and regional market sugar prices, weaker exchange rates and good results from downstream operations.
Lower sugar production in Zambia, Swaziland and Tanzania partly offset these benefits.
The contributions to operating profit were sugar production 52%, cane growing 36% and downstream 12%. By country, contributions were South Africa 19%, Malawi 45%, Zambia 12%, Swaziland 9%, Tanzania 9% and Mozambique 6%.
The group's agricultural operations generally performed satisfactorily with cane production in the 2008/09 season amounting to 5.1 million tons. Adverse weather conditions in Swaziland and Tanzania impacted negatively on output in those countries, while in Zambia the difficulties experienced during phase 1 of the factory expansion resulted in a significant tonnage of cane being carried over to the next season.
Group sugar production of 1.824 million tons was 2% above the previous season despite a 40 000 ton reduction in sugar production compared to the previous year in Zambia following the delayed start to the season and the disappointing mechanical performance of the plant after phase 1 of the factory expansion. Phase 2 of the project was completed as planned in April 2009.
The performance levels of the other factories throughout the group were generally good. The downstream plants have operated well, with output being similar to last year.
World prices of furfural and lactulose were strong during the year.
Domestic market sugar sales across the group were encouraging with all operations achieving an improvement in offtake. Exports into premium-priced markets are very important to the group's business and sugar sales into these markets were around 220 000 tons.
Demand from the group's regional markets remained at a satisfactory level although slightly less than the prior year.
The world sugar price, although continuing to be very volatile, adjusted upwards during the year. The improvement in this price also resulted in a firming of sugar revenue realisations in the regional markets supplied by Illovo. The world price rose in the early part of the year as a result of a forecast deficit in production, but then weakened in line with other commodities.
However, in recent months the price has increased strongly, driven by a significant production decline in India, the success of the European Union (EU) Sugar Regime reform in reducing output in that region, and capital constraints within the sugar industry in Brazil. These factors have resulted in a material global deficit in production being anticipated, thereby creating a platform for higher sugar prices.
Looking ahead Illovo said in the current year, own cane and sugar production are anticipated to exceed the levels achieved in the last season, while downstream production is expected to be at similar levels to those of last year. World sugar prices are anticipated to remain above last year's average levels but to continue to be volatile.
Provided they remain at current levels, it will be favourable for revenues from both world and regional markets.
Domestic market offtake is expected to remain positive.
The results for the current year will however be affected by the level of the rand, which has strengthened this year, compared to other currencies. Financing costs, as a result of increased borrowings related to the major expansion projects, are anticipated to increase significantly. The effective tax rate is expected to normalise at around 30%, it said.
- I-Net Bridge