Johannesburg — SUGAR producer Tongaat Hulett yesterday posted a strong set of results, increasing profit 37%, to R1,55bn from R1,13bn, and lifting earnings 44% to R839m for the year ended December 31.

Tongaat Hulett benefited from a raw sugar price that surged in the second half of last year, as bad weather limited output in Brazil and India.

The ongoing recovery of the Zimbabwe sugar operation also boosted performance.

"The significantly improved global sugar dynamics are beginning to be reflected in the financial results of the various sugar operations," CEO Peter Staude said. "We are very pleased with these results."

Tongaat Hulett said the recovery of the Zimbabwe operation coincided with the US dollarisation of the Zimbabwe economy last year and the return to more normal economic fundamentals relevant to the sugar business.

Sugar production in Zimbabwe for the period was 259 000 tons, down from 298 000 tons in 2008, and it contributed R1,457bn to the group's total R9,1bn revenue, up from R7,1bn.

However, Kagiso Asset Management researcher Abdul Davids said Zimbabwe sugar production was a bit of a disappointment.

"It came in 40000 tons below what we had expected," he said. "However, the pricing was strong during this period."

Davids said that, despite not meeting expectations, Zimbabwe was set for a good recovery.

Staude agreed that there was a lot still to come from Zimbabwe and "things are getting better".

"But we still performed below possibilities in this operation."

Staude said the group was well on its way to re-establishing cane supply and milling capacity utilisation in Zimbabwe.

"A recovery programme is currently under way, focused on improving cane yields and the re- establishment of outgrower cane lands, so as to restore sugar production to the existing installed capacity of 600000 tons per annum," he said.

The South African sugar milling, refining and agriculture operations contributed R159m to profit. Domestic sugar sales increased 17%, to 545000 tons from 466000 tons. However, total sugar production decreased to 564000 tons from 644000 tons in the previous year.

In Swaziland, Tambankulu Estates reported operating profit of R43m from R44m in 2008.

Sugar production in Mozambique increased to 134000 tons from 108000 tons in 2008. Tongaat Hulett said over the next two years it aimed to increase this to 300000 tons a year.

Meanwhile, profit from the starch operation increased to R256m from R240m, as sales volumes for starch and glucose declined 5,5% on lower demand.