Sugar mill churns out more for Tongaat
FMCG SUPPLIER NEWS
IOL Business - Mar 20th 2012, 08:05
Output at Tongaat Hulett’s Mafambisse sugar mill in Mozambique continued to perform above expectations as the mill produced 19 000 tons more sugar towards the end of the current year than in 2010/11.
Citing a senior representative at the JSE-listed sugar producer, Bloomberg reported yesterday that production at the Acucareirade de Mozambique mill in central Mafambisse district increased to 63 000 tons from 44 000 tons in 2010.
Tongaat Hulett owns 85 percent of Mafambisse sugar mill, while the government owns the other 15 percent.
The company’s Mozambique sugar plantations had experienced a growth in yields to 50 tons a hectare from 35 tons a hectare.
Daniel Isaacs, an analyst at 36One Asset Management, said the company’s operations in Mozambique were more profitable than those in South Africa, and it was good news for the firm that the mill had increased production. The mill was second only to Zimbabwe in profitability.
The surge in sugar output at the mill was attributed to new irrigation techniques and increased planting areas, which translated into greater yields. Although this would be a positive contribution to the company’s outlook, the floods in Mozambique had hurt production in the area.
Thousands of people were displaced in Mozambique in January in what was described as one of the country’s worst floods in 10 years.
The current sugar milling season in Mozambique was only 40 percent complete in August last year and it appeared as though the mill had performed beyond expectations.
Isaacs said the sugar producer’s overall profit margin would sink from 30 percent in 2010/11 to about 20 percent in the year to March 31 this year.
There was an improvement in the flow of electricity in the country, making production more efficient.
An analyst said this might translate into higher profit margins and a dramatic improvement in earnings during 2013/14, which would continue growing in subsequent years.
The group expected sugar output in Mozambique to grow 50 percent from last year.
Tongaat Hulett’s shares added 15 percent last year.
Yesterday, they rose 6c to end trade at R103.49. – Additional reporting by Bloomberg
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