South Africa’s Illovo Sugar said on Monday a scorching drought in crucial sugar-producing regions and low prices cut its half-year profit by nearly 60 percent.
Headline earnings per share – the main gauge of profit in South Africa that strips out certain one-off items – for the six months to end-September fell to 71.7 cents from 171.1 cents a year earlier, Illovo said in a statement.
The worst drought in southern Africa in decades cut sugar output by 10 percent to 1.16 million tons, with South African production the worst affected.
Global sugar prices hit seven-year lows in August, mainly due to oversupply, but analysts predict a deficit next year that will support prices.
Illovo said it hoped to partly offset the profit fall by boosting demand in southern Africa and cutting costs, and forecast full-year headline earnings per share down 25 percent to 45 percent on the previous year.
“Initiatives to improve the sales mix and to develop regional markets will benefit the full year earnings, whilst structural cost reduction programmes will continue to build on the good results achieved to date,” managing director Gavin Dalgleish said.