The share price for sugar producer Tongaat Hullet climbed 10% on Friday after the group said its solid performance in the year to end-March reflects progress in its turnaround strategy and hyperinflationary effects in Zimbabwe.
“Tongaat Hulett continues to implement decisive steps to stabilise and restructure its businesses to become more profitable and sustainable,” the group said.
“It is encouraging that operational drivers are beginning to reflect notable advancement on several fronts and that this is translating into improved financial performance.”
Operating profit jumped 491% to R3.3bn, which includes Zimbabwe hyperinflation, while gross revenue from continuing operations climbed 18% to R15.4bn in the year to end-March.
Tongaat implemented hyperinflation accounting for the first time in its Zimbabwe operations. The adoption of hyperinflation accounting and the official interbank exchange rate used to translate the results in rand being impacted by liquidity shortages pushed revenue in Zimbabwe up 37%.
Operating profit, excluding the operations in Zimbabwe, rose 158% to R375m from a loss of R650m in the comparable period.
Tongaat said a final determination in its dispute with Barloworld subsidiary KLL Group regarding a material adverse clause event triggered by Covid-19 in the sale of Tongaat’s starch business is expected by September 21.
“Our valuable assets provide the group with choices and if the transaction should fail Tongaat Hulett will consider the relaunch of the starch and glucose sales process, alternative asset disposals and the potential of raising equity,” the company said.
Headline earnings per share (including the discontinued starch and glucose operation) rose 111% to 90c during the period.
In morning trade, Tongaat’s share price jumped 10% to R5.50.