Tongaat topples on bleak update

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Tongaat topples on bleak update

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Published Date: 2018-04-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Tongaat topples on bleak update

World sugar prices have been under pressure and importers have been taking advantage of a lack of duty protection in SA

Tongaat's shares fell as much as 7.9% on Thursday after it warned of a sharp fall in full-year earnings.

In a trading statement, the sugar producer and landowner said it expected operating profit for the year to end-March to be at least 15% below the R2.33 billion reported a year ago. Headline earnings will be down by at least 30% from the R982 million previously reported, while earnings per share and headline earnings per share would be down by the same margin.

Tongaat said its South African sugar operations expected higher than anticipated import volumes into the local market as a result of inadequate duty protection over the period. It said the displaced locally-produced sugar was exported in the latter part of the year and was impacted by lower world sugar prices and a stronger rand.

The group's trading statement suggests that the second half of its financial year was significantly worse than the first half when it reported a 5% fall in revenue but a 9% increase in operating profit and a 5% rise in headline earnings per share. At that point, strong performances from its sugar operations in Mozambique and Zimbabwe offset a decline in South Africa. At the time, it said world sugar prices had been under pressure and importers were taking advantage of a gap in duty protection in the local market.

Tongaat's results can be choppy due to the land it owns in KwaZulu-Natal, which it sells to developers. In the first half of the year, it sold 68 hectares of land for developments north of Durban. It gave no indication of progress in land developments in Thursday's announcement but said it would release a more detailed trading statement in due course.

Its shares ended trade 6% lower at R87.50.




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