Upgrades effect growth - Tongaat

Johannesburg - Tongaat Hulett [JSE:TON] gained from improved sugar markets in its 2009 financial year. The sugar producer has also made strides to improve its production facilities in Mozambique and Zimbabwe and the benefits are expected to begin filtering through to the bottom line.

Tongaat reported headline earnings per share of 812.1c for the year to end-December 2009, compared to 565.6c one year prior.

Revenue increased 28% to R7.1bn for the same period. Profit from operations was 37% higher at R1.5bn.

Higher earnings are as a result of improved margins in the starch and glucose markets, despite a 5.5% drop in demand for these products in the local market.

Tongaat has announced it is almost ready to begin using the newly installed sugar production facility in Mozambique. The region has preferential access to the European Union market.

The company's Zimbabwean operations have also reported improvements in terms of re-establishing cane supply and milling capacity.

"The recovery of the Zimbabwe sugar operations has commenced," said CEO Peter Staude.

"This coincides with the US dollarisation of the Zimbabwe economy in 2009 and the return to more normal economic fundamentals relevant to the sugar business," he added.

In South Africa, Tongaat is currently working on finding optimal use for its sugar cane fields north of Durban. During the year under review, Tongaat sold 150 hectares of land - some of this land will now be used by the new international airport at La Mercy.

Tongaat has also announced that it will change its financial year end to March 31. This is effective from this year and the company will report results for the 15 months to March 2010. The final dividend will be announced at that stage.

The reason for the change is that the end of March corresponds with the sugar season in Tongaat's operational geographies.

- Fin24.com