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Tongaat Hulett’s review, following an accounting scandal that brought the Durban-based sugar producer and land developer to its knees last year, is firmly on track, as the group posted a strong semi-annual performance (through the end of September 2020) on Friday.
CEO Gavin Hudson, who was hired to clean up the mess left by the group’s former top executives, has led Tongaat Hulett’s turnaround.
Read: Tongaat Hulett takes civil and criminal actions against former executives
The group is now about to report an overall profit, and its overall loss was reduced to R6 million for the period, compared to an overall loss of R517 million previously.
Tongaat Hulett’s revenue for the six-month period affected by Covid-19 increased 37% to 8.2 billion rand and operating profit increased 95% to 1.9 billion rand.
“Total earnings registered a sharp turnaround, increasing 156% to a profit of R175 million from a loss of R315 million previously, while cash flow from operating activities improved by R1.9 billion,” the group said at a release.
This led to “an improved overall loss of R6 million versus a previous loss of R517 million,” Tongaat Hulett noted.
He added that good progress has been made in reducing its debt, with transactions totaling R6.4 billion concluded to date, of which R5.76 billion was applied towards the group’s debt reduction target. of R8.1 billion by September 30, 2021.
This includes the recently completed sale of its starch business to Barloworld in October 2020.
Read:
Tongaat sells starch business to Barloworld unit for R5.26 billion
Starch sale is a relief to Tongaat Hulett
“Tongaat Hulett has made excellent progress and delivered under tough economic conditions, most affected by the sudden onset of Covid-19,” Hudson said, following the release of the group’s latest set of results.
“Critical indicators continue to move in the right direction and I am very proud of how the team has risen to meet the exceptionally challenging conditions. Our sugar operations delivered strong results, driven by a strong turnaround in South Africa and good operating performance in Mozambique and Zimbabwe, ”he said.
Tongaat Hullett CEO Gavin Hudson. Image: supplied
“Tongaat Hulett is a strong company with significant assets. Now is the time to turn around and look to future growth. We are in a good position to do so, as our sugar business is a leading agribusiness in the SADC. [the Southern African Development Community] and our real estate business has one of the largest portfolios of premier commercial land in KwaZulu-Natal and indeed South Africa, ”added Hudson.
He stressed that the group’s board and team are fully focused on turning the tide, by “delivering on their strategic plan.” This includes driving efficiencies, building the capacity of people and processes, and continuing to lay the foundation to create a platform for sustainable and profitable growth.
“Much work remains to be done, but we are happy with the progress to date. Tongaat Hulett’s focus is to continue to position the group favorably and take advantage of existing opportunities and future diversification prospects.
“We are regaining confidence in Tongaat Hulett and that is testament to a great team and incredible hard work over the past two years,” said Hudson.
Tongaat Hulett’s share price rose almost 2% on Friday morning (9:30 am), trading at R11.98, following the release of its interim results. But by 11:40 am, the stock had weakened more than 4.6% to R11.20.
After restarting trading on the JSE in late January, the stock fell to an all-time low of around R2 during the initial “hard” Covid-19 lockdown in April. However, it has recovered more than 100% in the last six months.
However, following last year’s accounting scandal, the group’s shares have lost more than 88% of their value and currently have a market capitalization of just under R1.6 billion.
Tongaat Hulett did not declare an interim dividend due to its current financial situation of general losses.
