Tongaat Hulett says turnaround strategy is working as operating profit shoots up

Troubled sugar producer Tongaat Hulett says it has turned a corner and its board believes that it is in a much stronger position now.

Operating profits shot up dramatically in the year ended 31 March 2020, it said in a trading update published on Wednesday afternoon.

Tongaat Hulett said it was expecting to report that operating profit was some 200% higher than the R1.2 billion it reported in the past financial year, with the group expecting to show "substantial improvement" from the headline loss of R923 million it reported in the previous financial year.

It is expecting to present its year-end results on 31 July.

Tongaat said its South African sugar operations have returned to a profit making position after significant improvements in production and cost management. 

"The sugar mills recorded one of the best performances in recent years. Local market sales benefited from increased volumes and the impact of the previous two price increases," said Tongaat Hulett in the trading update.

Outside SA, sugar operations in Mozambique also moved to a profit-making position after reporting operating losses in the previous two years. While operating profit in Zimbabwe increased by more than 140%, Tongaat Hulett said there were net monetary losses arising from hyperinflation accounting in that country. The company will provide more details of the impact of hyperinflation when it presents its results.