CAPITALISING ON TONGAAT HULETT'S
STRATEGIC PLATFORM
- Profit from operations of R1,691 billion for the
15 month period ended March 2010 reflected an
increase of 28 percent over the corresponding period.
Tongaat Hulett has increased profit from continuing
operations every year since 2003 as the company
benefits from its growing operations and the emerging
favourable global dynamics of increasing demand for
glucose, starch, sugar, renewable energy and land.
- In a world sugar market where demand is increasing
and the replacement cost of new milling capacity and
its associated cane developments is high, Tongaat
Hulett has the opportunity to enhance shareholder
returns by increasing the utilisation of its existing milling
assets through an improvement in yields, cane to sugar
recoveries and the area under cane, with a simultaneous
reduction in unit costs of production. Sugar production
in 2009/10 was 1,0 million tons with sugar milling
capacity in excess of 1,9 million tons, including the
Mozambique expansions at Xinavane and Mafambisse
and the installed capacity in Zimbabwe.
- The Zimbabwe operations are in a substantial recovery
phase. In normalised conditions the Zimbabwean sugar
operations would have almost twice the capacity of the
expanded Mozambique operations, with similar market
access and costs.
- The structural changes that are taking place in
international agricultural commodity markets have
resulted in improved competitiveness of South African
maize and of Tongaat Hulett’s starch operations, which
have additional capacity for local and export growth.
- In a world that values the environmental benefits of
renewable energy and is attempting to reduce its carbon
footprint through lower carbon dioxide emissions
and a decrease in reliance on fossil fuels, Tongaat
Hulett’s Southern African cane processing operations
are well placed to increase realisations from bagasse
and other cane biomass in electricity cogeneration
production. Sugar cane is also the most cost
effective and environmentally efficient feedstock for
ethanol production.
- The value of the Huletts® brand continues to be
optimised in South Africa, the largest sugar market in
the Southern African region. The established Voermol®
animal feeds brand is another cornerstone of the
downstream value added activities.
- Tongaat Hulett owns 13 863 gross hectares for
development in South Africa. Its landholdings consist
of 6 442 hectares in the prime developable coastal and tourism areas north of Durban, a further 2 047 hectares
to the west of the city and 5 374 hectares located in
the eThekwini growth corridor north of the city. The
opening of the new King Shaka International Airport at
La Mercy, with its ability to attract direct international
flights, the development of the surrounding trade port
and the expansion of the existing port will, over time,
generate new investment in the region. As the region
evolves, demand for properties for tourist, logistics,
manufacturing, services and residential purposes is
likely to increase. Current political and social dynamics
are resulting in an increased demand for land for low
income housing, creating both the opportunity and
socio-economic urgency to establish communities with
affordable, quality housing, health care, educational
and social facilities. During the period, the company
continued to engage and collaborate with the
eThekwini municipality in developing the planning
processes which set the framework for the growth
and direction of development and new investment,
as well as provide guidance from a land use and
intensity perspective.
- In the current property cycle, few hectares have been or
are expected to be converted in the high value, prime
locations on the coastline and to the west of eThekwini
and the focus remains on increasing stakeholder value
through planning processes, rezoning and environmental
approvals and infrastructure investment in cooperation
with the appropriate spheres of government.
- The safety and the welfare of all employees remains a
key priority as the business strives to create a workplace
free of injuries. The Lost Time Injury Frequency Rate
decreased to below 0,10 for the first time and was
recorded at 0,097 (2008: 0,11), the lowest rate amongst
all companies assessed by NOSA.
- Tongaat Hulett is focused on sustainable BEE and
indigenisation in the agriculture sector through
the development of local farmers in Mozambique,
Zimbabwe and South Africa, including post settlement
solutions in the land reform programme.
- Tongaat Hulett’s 25 percent BEE equity participation
includes strategic partners, disadvantaged communities
surrounding its land developments, small cane grower
communities surrounding its South African sugar mills
and BEE management and employee share ownership
schemes. The company continues to work with these
BEE partners to enhance its competitive position in
the region.
