Thabang Mokopanele
5 August 2008
Johannesburg — AGRICULTURAL processing and land management group Tongaat Hulett is fast-tracking the planning of renewable power generation at four of its eight sugar mills because of predictions "that electricity demand in SA will exceed generating capacity for a five- to seven-year period".
CEO Peter Staude said, when releasing interim results yesterday, that the group was working on a pre-engineering assessment for the power generation, which is expected to produce 106MW.
"We will do it with time lines of 30 months but it is not yet final because it has to be commercially viable.
"The plan is to sell it back to the network and other potential buyers," Staude said.
Tongaat Hulett said competitive maize prices, improved margins and volume growth in the starch operations saw it increase profit from operations 44% to R443m for the half-year to June, while revenue surged 28% to R3,1 bn.
Headline earnings rose to R252m from a loss of R155m a year ago - which was affected by corporate structuring transactions. An interim dividend of 160c a share was declared.
Staude said higher contributions were earned from products supplied to the animal feeds and edible oil market from starch and sugar operations in SA. Profit from the starch operations jumped to R103m as market conditions for starch and glucose improved.
The rise in international maize prices encouraged increased plantings in SA, and this, coupled with good weather conditions, had led to an increase in the South African maize crop to 11,6-million tons.
"This has resulted in local maize prices trading close to world prices. Starch and glucose selling prices have improved as demand for agricultural commodities across all sectors in international markets continues to increase due to changing dietary requirements and demand from biofuels," Staude said.
The group's five main operations, in Mozambique, Zimbabwe and Swaziland, contributed R141m to operating profit.
In Mozambique, the planting of an additional 3 509ha has been completed with another 5000ha planned to be planted by the end of this year. The related land preparation has been substantially completed.
Staude said the profitability of operations in Zimbabwe had been affected by unsustainable macroeconomic conditions, including hyperinflation, foreign currency shortages, non-availability of key inputs and local price controls. In the meantime, the group was maintaining infrastructure and its skills base. It was "positioned for a rapid turnaround once the macroeconomic conditions in Zimbabwe are restored".
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