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Weak sugar price keeps a lid on Tongaat profit rise

May 27, 2014

Tongaat Hulett reported a 6 percent increase in full-year earnings yesterday, weighed down by softer global sugar prices and weak domestic demand.

Diluted headline earnings for the year to March were R10.223 a share from R9.61 the previous year.

Local producers such as Tongaat say the world price of sugar is lower than the cost of production, resulting in money-losing sales.

But chief executive Peter Staude told Reuters that import tariffs introduced in Zimbabwe and South Africa in April would benefit sales and prices in the next financial year.

"There is an underlying trend of volatility in the world sugar price," he said. "But imports dropped dramatically in April and May after some protection came in."

Total sugar output rose 13.5 percent to 1.424 million tons and the company said it was expected to rise to more than 1.8 million tons over the next four years.

The company said it expected international sugar prices to stabilise.

It lauded the Zimbabwean authorities for acting swiftly to remove illegal settlers off its sugar plantations last week.

Its shares closed 2.04 percent higher on the day at R125 on the JSE yesterday. - Reuters

Cape Argus

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Source: Cape Argus (South Africa)

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