“We have had a mixed season so far with lower sugar prices across our regional and export markets, variable weather conditions and the effects of industrial action,” said company managing director, Gavin Dalgleish.
(READ MORE: Bitter-sweet global market for Illovo Sugar)
“Notwithstanding these challenges, our operations in Zambia and Mozambique are expected to achieve record sugar and cane production for the year.”
However, the sugar producer reported a five per cent drop in revenue for the six months ending 30 September 2014 to 5.9 billion rand from 6.2 billion rand for the same period in 2013.
[DATA ILV:Illovo]’s operating profit also decreased to 1.3 billion rand in the 2014 interim period, a 14 per cent decline from 1.6 billion rand in 2013.
“The six months period presented both challenges and opportunities for the Illovo group. Operating profit was impacted by a fall in group cane and sugar production together with a decline in world, regional and European (EU) market prices,” it said.
“This reduction was partially offset by a steady increase in domestic market sales revenue, a weaker rand benefitting export sales, meaningful cost-reduction initiatives and an increased profit contribution from Illovo’s downstream and co-generation businesses.”
(READ MORE: Illovo expects increased sugar production)
Profit before taxation decreased to 1.2 billion rand in 2014 from 1.4 billion rand in 2013 and headline earnings per share declined 10 per cent to 171 cents from 190 cents.
“Sugar market conditions are expected to remain challenging but efforts to improve the trading environments of the countries in which Illovo operates continue. Growth in domestic sales and a better market mix are expected to assist full year earnings,” Illovo said.
“With significant cane, sugar and downstream assets in southern Africa, its attractive and sustainable domestic markets, a strong balance sheet and healthy cash generation, the Illovo Sugar group remains well placed for growth into the future.”