Tongaat Hulett focuses on meeting local sugar demand

September 9, 2021

LIVINGSTONE MARUFU

 

Zimbabwe’s largest sugar producer, Tongaat Hulett Zimbabwe, says it is focusing on meeting growing local demand, and will only supply regional markets when it has  a surplus.

The company has been exporting sugar to regional markets, especially into Kenya.

Although the move was helping the company generate foreign currency to help sustain local operations which remain vulnerable to the volatile environment, it starved the local market.

However, Kenya has imposed import restrictions on the commodity.

The sugar producer said it is prepared to serve the growing local demand. It will only export surplus sugar.

“Marketing focus is on maximising local market requirements with residual stocks being allocated to regional and international premium markets to generate additional foreign currency for the company and the nation,” the company said.

“In the medium to long-term, the company is considering various diversification initiatives in order to increase the contribution of its non-sugar business.”

Production figures for Tongaat Hulett went down 4% to 204 384 tonnes in the 12 months to March 31, 2021 from 212 004 tonnes reported in the prior comparative period. However, the company’s share of the industry sugar sales went up 2% to 50% from 48%   in 2020.

The revenue went up 34% in the reviewed period to ZWL$16.8bn from ZWL$12.5bn.

Profit for the year went 58% down to ZWL$1.1bn from ZWL$2.6bn.

The company’s overall cane deliveries from the company’s plantations (miller-cum-planter) and private farmers were impacted by irrigation power challenges and the dry spell experienced during the 2019/20 peak growing period of October 2019 to March 2020.

The wet spell in December 2020 interrupted the harvesting programme resulting in a total of 555 hectares for both the company and private farmers being carried over for harvest in the 2021/22 production season.

Sugar production reduced by 4% on the back of lower than expected mill efficiencies and inclement weather conditions (incessant rains) which impacted cane quality while the drop in cane from traditional industry sources was compensated for by cane sourced from a third party.

Steps were taken during the January to April 2021 off-crop period to overhaul the mill to ensure improved performance in the 2021/22 production year, whilst solar projects to augment electricity supply at critical water pumping installations are under consideration.

The board declared and paid an interim dividend of ZWL$1.21 per share during the year ended 31 March 2021 due to the company’s positive development.

The government has since assured the company that it will be granted security of tenure by way of a 99-year lease on Tongaat Hulett’s Hippo Valley North (23 979 hectares), whilst maintaining freehold title on Hippo Valley South (16 433 hectares).

Provisionally, an institutional offer letter was issued by the government, whilst the requisite physical planning and administrative processes are nearing completion, paving way for the issuance of the 99-year lease.

The company has also had its sugar milling license renewed for another twenty-year period ending December 2040.

These positive actions from the government provide further confidence and stability to the operations.

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