July 17 (Bloomberg) -- Illovo Sugar Ltd. headed for the lowest close in more than five months after Africa’s largest sugar producer today announced the resignation of Managing Director Graham Clark.
Clark, who has served on the board of the Mount Edgecombe, KwaZulu-Natal province-based company since 1997 and as managing director from 2009, will resign from his position on Aug. 31 and leave Illovo at the end of September “to pursue a new career opportunity elsewhere in Africa,” Chairman Don MacLeod said in a statement. Group Operations Director Gavin Dalgleish will take his position from Sept. 1, MacLeod said.
Clark leaves the company as a global surplus of the sweetener cuts prices, with raw-sugar futures falling 18 percent this year. Prices are now below the cost of output for most producers, according to Illovo. While local prices in South Africa and Tanzania are under pressure because of low-cost imports, Illovo is able to offset this with premiums in markets such as Zambia, it said.
“This is a big surprise,” Anthony Geard, an analyst at Investec Securities Ltd., said by phone from Cape Town. “Graham Clark has been at the center of Illovo for a very long time.”
The shares fell as much as 5.2 percent, the most since July 21, 2010, and traded 2.7 percent down at 30.16 rand by 3:46 p.m. in Johannesburg. A close at this level would be the lowest since Jan. 30.
Illovo’s prospects are favorable because of increased production and a weaker rand that will boost earnings, Geard said. The company forecast its sugar output will rise to 1.9 million metric tons from 1.75 million tons in the year through March, it said. The rand has depreciated 14 percent against the dollar this year, and Illovo derived 91 percent of its operating profit outside South Africa last year.
The company’s earnings per share, excluding one-time items, will probably be 2.32 rand for the year through March, according to the median estimate of seven analysts compiled by Bloomberg. Profit was 1.90 rand per share last year.
South Africa is the continent’s biggest producer of the sweetener, with production of 1.95 million tons in the 2013 season.
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