JSE-listed sugar producer and land developer Tongaat Hulett on Monday flagged a headline loss of up to R266 million in a trading statement for its six-months ended 30 September 2021.
The Durban-based group, which is set to publish its latest interim results on Thursday (December 9), highlighted the hyperinflation situation in Zimbabwe, as well as the July unrest in KwaZulu-Natal and Covid-19 pressures as main contributors for the expected loss.
For its 2020 half-year, Tongaat Hulett reported a restated headline profit of R241 million, and its turnaround seemed to be still on track despite the Covid-19 pandemic.
However, the group’s trading statement for its latest interim period, shows that trio of challenges are putting a spanner in the works of its turnaround plan.
Nevertheless, Tongaat Hulett maintained in its Sens statement that it “has continued to make steady progress in the implementation of its turnaround strategy and in restoring the group onto a sustainable growth path”.
The turnaround plan came in the wake of an accounting scandal involving several of its former executives, which hit the group in 2019.
Tongaat Hulett noted in its trading statement that a headline loss of between R242 million and R266 million is expected for its latest half-year. This would see its headline loss per share for the period raging between 179 cents (c) and 197c.
“The group experienced strong local demand across all sugar businesses and achieved good market share gains. However, the interim period presented several additional obstacles to navigate, including hyperinflationary effects and higher input costs in Zimbabwe, disappointing milling performance in South Africa due to Covid-related maintenance delays, as well as significant challenges and losses related to the civil riots in South Africa, which also weighed on the revenue and profits of the property business,” it said.
“These obstacles were countered by much lower finance charges which contributed to the group generating profit before tax growth for the period of more than 20%,” it however added.
Tongaat Hulett further highlighted “two non-operational matters” that included:
- the effective tax rate for the period was 97% due to deferred tax assets not being provided for tax losses in South Africa and the non-deductible net monetary loss; and,
- since the majority of the profits are generated in Zimbabwe, and the interest and tax is carried in South Africa, the group’s share of the profits for the period is negative.