Tongaat Sees Profit Falling 18% as Sugar Drop Counters Propertyby
South Africa’s worst drought in century cuts sugar output 40%
Company allowed to release more land for property development
Tongaat Hulett Ltd., South Africa’s biggest sugar producer by market value, said full-year profit probably fell 18 percent after reduced output countered a record performance from its land-development business.
Headline earnings, which exclude one-time items, are seen at about 6.78 rand per share for the year ended March 31 from 8.26 rand 12 months earlier, the Tongaat, South Africa-based company said in a statement Friday.
“Record performances from the land conversion and development activities and the starch operation have been negated by the impact of the substantial reduction in Tongaat Hulett’s sugar production as a result of poor growing conditions," it said in the statement.
Sugar production dropped 22 percent to 1.02 million metric tons, led by a 40 percent plunge in output from its South African farms, it said. The country experienced the worst drought in more than a century last year, cutting production of crops including wheat and corn.
Since 1990, the company has been selling former agricultural areas near Durban, on South Africa’s east coast, and developed about 2,000 hectares of residential and retail space as a result, including the Umhlanga Gateway and Crescent shopping centers, the Sibaya Casino and Entertainment World, four hotels and the Umhlanga Hospital.
Tongaat sold 121 hectares (298,998 acres) of land for development in the year through March and expects to report an operating profit of 1.1 billion rand from this, it said. The company now has approval to release another 2,600 hectares from agriculture for development, it said.
The stock fell 0.4 percent to 112.56 rand a share at 3:57 p.m. in Johannesburg trading, paring the increase this year to 21 percent and giving the company a market value of 15.2 billion rand ($968 million)