“The business delivered an acceptable financial and operational performance last year considering the difficult trading conditions in all of our markets. Sugar and downstream production and revenues were both up and we will continue to seek ways to diversify our earnings even further,” the group said in a statement.
Group revenue for the year ended 31 March 2014 was up 20 per cent to 13.2 billion rand from 10.9 billion rand in the previous comparative year.
Operating profit was however flat at 1.8 billion rand for the period, which was impacted by low-priced imported sugar and an unfavourable fair value adjustment. The possibility of sugar import tariffs in South Africa, according to the group, could however curb the negative impact of these imports in the future.
Illovo Sugar is a global sugar producer based in South Africa that produces raw and refined sugar for local, regional, European Union and American markets.
Sugar production up 4.8 per cent to 1.83 million tons for the period under review, and profit before tax remained flat at 1.6 billion rand.
(READ MORE: Illovo expects increased sugar production)
Headline earnings per share were up 4.3 per cent to 194 cents from 186 cents in the previous comparative year.
“In South Africa, full recovery from the drought and the increased area under cane resulted in an additional 756 000 tons of cane being milled, a 15 per cent increase on the prior year,” the group explained.
“In Zambia, the effects of reduced irrigation as a result of the prior-season turbo alternator failure and unusually heavy rains in January 2013 combined to reduce the size of the crop.”
Similar conditions in Mozambique also negatively impacted late season cane yields in the country, while the latter half of the season was unseasonably wet in Tanzania, resulting in cane being carried over into the next season. An additional 1,837 hectares of land under cane harvested by our growers increased cane supply in Malawi and Swaziland.
Revenue for the group’s sugar productions segment improved by 71 per cent to 9.3 billion rand from 7.6 billion rand in the previous year.
Revenue for Illovo’s cane growing segment took a similar turn, with a 2.5 billion rand in the previous year. The downstream and co-generation segment’s revenue increased 978.2 million rand from 804.4 million rand in the previous year.
Total revenue for the group’s geographical segments, which include Tanzania, Zambia, South Africa, Swaziland, Mozambique and Tanzania, grew to 13.9 billion rand for the period under review from 10.9 billion rand in the previous comparative year.
“We anticipate that market conditions will generally be tough in the year ahead, but we are confident that our endeavours will better position us to drive future growth, with a strong balance sheet and operating cash flow,” said the group.