KZN’s July unrest deals a R158m blow to Tongaat Hulett’s turnaround plans

JSE-listed sugar producer and land developer Tongaat Hulett took a R158 million financial blow from the July unrest that affected its home-base of KwaZulu-Natal (KZN), the group’s half-year results (ending September 30) published on Thursday morning reveals.

The financial hit could not have come at a worse time for the group, which is in the throes of a turnaround plan following the accounting scandal in 2019 implicating former executives.

Tongaat Hulett highlighted in its interims Sens statement that the civil unrest and riots not only had a “R158 million impact … on profits of the South African sugar operation” but also resulted in delayed land sales in its property division.

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KZN riots: sugar industry losses over R84m

KwaZulu-Natal cannot afford this, nor can the rest of SA

The group reported a headline loss of R254 million for the half-year (from continuing operations), in contrast to headline earnings of R59 million for its comparative interim period ending September 2020.

Other points that it highlighted as having a negative impact on its latest financial performance included:

• Lower raw sugar production
• Zimbabwe hyperinflation dynamics
• Restatements arising from correction of prior period errors
• The group’s taxation at an effective 97% tax rate due to deferred tax on losses not recognised, and
• A partial contribution from the disposed starch and glucose as well as Namibian and Eswatini operations in the comparative period.

While Tongaat Hulett reported that its revenue from continuing operations increased 5% to R8.5 billion, the group’s operating profit plunged 23% to R1.3 billion (September 2020: R1.7 billion)