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TONGAAT Hulett’s Zimbabwe operations saw their sugar production for the year ended March 31, 2016 decline 7,4 percent to 412, 000 tonnes. The South Africa-headquartered Tongaat Hulett’s Zimbabwe operations include the wholly-owned Triangle Sugar operation and its 50,3 percent holding in Hippo Valley Estates. The Zimbabwe operations’ sales also declined to 403,000 tonnes during the period under review, from 491,000 tonnes in 2015.

Announcing its audited results for the year just ended, Tongaat Hulett reported that its Zimbabwe division’s financial performance had been affected by a dip in sugar production as well as underperformance of its exports. But local market sales volumes were flat.

“The Zimbabwe sugar operating profit reduced to R15 million compared to R386 million in the prior year. Sugar production of 412,000 tons was below the 445,000 tons of the prior year.

“There were both lower export sales volumes and lower export prices. Domestic market sales volume levels have been maintained,” said Tongaat chairman Bahle Sibisi.

“The strength of the US dollar has exerted pressure, particularly in respect of US dollar based costs (such as wages and salaries) and euro based revenues.” Zimbabwe was only one the countries in the region to experience declines in sugar output as the effects of the El Nino-induced drought hit home.

“The quantum of irrigation has been reduced as a mitigation measure against poor rainfall and low dam levels,” said Tongaat. Broadly, the group’s sugar production volumes fell 22 percent to 1,02 million metric tons during the period under review. But Tongaat has forecasted that output could rise to as much as 12 percent to 1,15 million tonnes in the new financial year, depending on the rainfall situation going forward.

“The estimate for sugar production in total for the 2016/17 season is between 990,000 and 1,150,000 tons, compared to 1 ,023,000 tons last year. Rainfall during the summer of 2016/17 will determine whether more regular production levels return in 2017/18.”

The firm is also upbeat on revenue performance next year. “The next year should see Tongaat Hulett benefit substantially from improved local sugar market revenues following the import protection measures implemented in SA, Mozambique and Zimbabwe,” said the chairman.

In terms of the group’s financial performance, Tongaat Hulett’s operating profit from sugar slid significantly to R124 million during the year from R806 million in the prior year. The group’s overall after-tax profit fell 26 percent to R770 million. – BH24.