Tongaat-Hulett Group unlocks value from investments
The Group's three internationally competitive businesses - starch & glucose
sugar, and aluminium - have produced good earnings growth in the six months to
the end of June 2002.
"The Group is unlocking substantial value from its
recent major investments in African Products and Hulett Aluminium with strong
operating earnings growths from both these divisions," said Peter Staude, CEO of
the Tongaat-Hulett Group.
Revenue from continuing operations rose 17
percent to R3 billion, and earnings were up 28 percent at R350 million after
dividends from Triangle were received and net interest paid.
the strengthening of the rand to June this year has had an adverse effect on
headline earnings, which nevertheless rose seven percent.
Had it not been
for a loss of R57 million on the translation of £41 million in strategic cash
resources, headline earnings would have risen by 34 percent.
On the other
hand strong divisional cash flows enabled the Group to substantially reduce its
net borrowings from R377 million to R161 million during the interim
In addition the board has decided to adjust the ratio between the
interim and final dividends and has declared an increased interim dividend of 80
cents per share (2001: 62 cents).
African Products achieved a growth in
revenue of 43 percent and in operating earnings of 83 percent.
pinning this performance was a strong 11 percent growth in the local market for
starch & glucose products, which was partially driven by improved customer
exports and import substitution, a doubling in export earnings boosted by a
weaker rand, and the maintenance of the average maize input costs at well below
the prevailing market prices," said Staude.
Sugar production from all
operations is expected to rise by 13 percent to 1,25 million tons. South African
operation's contribution is expected to be 840 000 tons (last year actual
production was 756 000 tons) while the higher cane and sugar production in
Swaziland and Mozambique are increasingly contributing towards improved
Despite the deteriorating socio-economic conditions in Zimbabwe
the operation there is expected to produce 280 000 tons of sugar, an increase of
six percent on last year's figure.
The Group has, to date, received R31
million in dividends from the Zimbabwe operation, however it cautions that the
difficult economic and business environment may impact on receipts in the second
half of the year.
Hulett Aluminium continued to produce outstanding
results, increasing revenue by 20 percent to a record R1,5 billion, while
earnings before interest and tax were R176 million up 52 percent compared to the
corresponding period in 2001. The Group proportionally consolidates 50
percent of Hulett Aluminium.
These results were achieved despite
difficult market conditions with international demand and margins in dollar
terms being at their lowest level for many years.
" The business is
steadily improving its sales mix as it moves up the product profitability curve,
growing its capability to produce products with more challenging and stringent
quality requirements. It continues to improve its market share in key targeted
product groupings and geographic locations," said Staude.
While the Group
remains on track to deliver strong growth in volumes, revenue and operating
earnings, it cautioned that headline earnings would be significantly influenced
by the value of the Rand for the remainder of the year.