Sugar prices sweeten Tongaat's profit
July 31, 2006
By Stewart Bailey
Johannesburg - Anglo American's Tongaat-Hulett Group unit, Africa's second-biggest sugar producer, said first-half profit rose 47 percent as the price of the sweetener gained and it earned more money from property.
Net income for the six months to June 30 rose to R317 million, or R2.94 a share, from R216 million, or R2.06, a year earlier, the Tongaat, South Africa-based company said on Monday in a statement to the Johannesburg Stock Exchange. Sales rose 12 percent to R3.5 billion.
Sugar prices climbed 24 percent this year, rising to a record $497 as metric ton on May 12 in London, as surging crude oil prices increased demand for sugar for use in ethanol plants. Tongaat on February 20 proposed spinning off its aluminium unit as Anglo American, which owns a 51 percent stake, sells assets such as its steel and paper units to focus on mining.
"The results are starting to reflect the benefits of changing global sugar fundamentals," the company said.
The property unit's operating profit rose 52 percent "mainly from significantly increased contributions from the commercial and resorts portfolios."
Shares of Tongaat gained 18 percent this year, for a market value of R10.2 billion. That compares with a 50 percent jump by Illovo Sugar, Africa's largest sugar producer, in which Associated British Foods bought a 51 percent stake earlier this month.
Annual sugar production is expected to rise by 6 percent from last year to 1.23 million tons, with its South African operations contributing 780 000 tons, the company said.
White sugar for October delivery rose 0.1 percent to $439 a ton on the Euronext.liffe exchange on July 28, bringing its gains this year to 15 percent.
Tongaat's aluminium unit accounted for 22 percent of operating profit last year while the sugar business contributed a 32 percent share. - Bloomberg
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