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Tongaat shares drop after profit warning

The company has been hit by a sugar tax in South Africa and a currency crisis in Zimbabwe.

South Africa‘s Tongaat Hulett warned on Friday that it expected a loss for the year to March 31, sending shares in the struggling sugar producer down more than 14%.

The company, which has brought in a new chief executive and chief financial officer to lead a turnaround, has been hit by a sugar tax in South Africa and a currency crisis in Zimbabwe.

It said it expected a loss in headline earnings per share (Heps in excess of 803 cents and a loss in earnings per share (EPS) in excess of 927 cents.

It posted a profit of R617 million ($44.14 million) the year before.

“It has become clear that the business is facing more challenges and operational performance has continued to decline,” it said in a statement, adding that the problems had the board’s urgent attention.

New CEO, Gavin Hudson, who joined the firm at the start of the month, will expedite a strategic and financial review, it said.

The company added that it had appointed advisers and would enter into discussions with its lenders next week.

Tongaat had flagged a half-year loss in November, when it said net debt stood at R7.75 billion ($554 million).

High debt levels and interest costs had weighed on its earnings, it said on Friday.

The firm’s shares were down 14.49% at 1333 GMT.

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