JSE-listed sugar producer and land developer Tongaat Hulett noted a loss of up to 266 million rand on Monday in a trade release for the six months ended September 30, 2021.
The Durban-based group, which will release its latest interim results on Thursday (December 9), highlighted the hyperinflation situation in Zimbabwe, as well as the July riots in KwaZulu-Natal and Covid-19 pressures as major contributors to the expected loss.
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For its 2020 semester, Tongaat Hulett reported a restated overall profit of 241 million rand, and its turnaround appeared to be on track despite the Covid-19 pandemic.
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However, the group’s commercial statement for its last interim period shows that three challenges are putting a key on the works of its restructuring plan.
Nonetheless, Tongaat Hulett said in its Sens statement that it “has continued to make steady progress in implementing its strategy for change and restoring the group to a sustainable growth path.”
The restructuring plan came about in the wake of an accounting scandal involving several of its former executives, which affected the group in 2019.
Tongaat Hulett noted in its trade statement that an overall loss of between R242 million and R266 million is expected for its last half. This would see your overall loss per share for the period between 179 cents (c) and 197c.
“The group experienced strong local demand in all sugar businesses and achieved good market share gains. However, the interim period presented several additional hurdles 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 challenges and losses. major events related to civil unrest in the south. Africa, which also weighed on income and profits from the real estate business, ”he said.
“These obstacles were offset by much lower financial burdens that contributed to the group generating pre-tax earnings over the period of more than 20%,” he noted however.
Tongaat Hulett further highlighted “two non-operational issues” which included:
- the effective tax rate for the period was 97% because deferred tax assets were not provided for South African tax losses and non-deductible net monetary loss; and,
- Since most earnings are generated in Zimbabwe and interest and taxes are incurred in South Africa, the group’s share of earnings for the period is negative.