TONGAAT Hulett’s share price leapt by 8 percent on the JSE yesterday morning after the agriculture and agri-processing group reduced its net debt by 42 percent for the year to the end of March, despite a huge fall in earnings.

The group reported net debt of R6.57 billion at the end of the period, down from R11.35bn compared to last year.

Chief financial officer Rob Aitken said Tongaat was pleased with the 42 percent reduction in its debt during the financial year.

“We want to continue reducing the debt in the next coming months, and we are targeting a sustainable debt level of R3bn. We hope that we would be able to slash it by a further R3bn in the next nine months-to-three-year period,” Aitken said.

He said the group would be in a better position to resume paying dividends once it achieved those sustainable debt levels.

In the results, revenue from continuing operations decreased by 3 percent to R14.92bn, and operating profit from continuing operations fell by 44 percent to R1.82bn.

Its headline loss widened to R1.11bn compared to a loss of R285 million reported a year earlier, while the headline loss a share jumped to 822 cents a share, up from a loss of 211c reported a year earlier.

Chief executive Gavin Hudson said the reduction in headline earnings was a result of hyperinflation in Zimbabwe, the reduction in property sales and the challenges presented by the Covid-19 outbreak.

“Our turnaround plan commenced just under two years ago, and our efforts continue to yield positive results, despite some headwinds along the way. The results are presented against a backdrop of unprecedented and challenging times triggered by the Covid-19 pandemic,” Hudson said.

He said that although tangible progress has been made, they continued to repair and rebuild what was a fragile organisation, with remnants of substantial debt, constrained cash flows, and a legacy of poor operational and cultural practices, which had been challenging to navigate.

Tongaat has operations in South Africa, Zimbabwe, Mozambique and other Southern African Development Community countries such as eSwatini, Namibia and Botswana.

In South Africa, the group said it had been very disappointed by the riots and looting of businesses in Gauteng and KwaZulu-Natal.

“Those are unfortunate incidents, and they have the potential to damage business confidence. They have already created a negative impact on foreign direct investment into the country.

“Obviously, Tongaat has been affected by the violence, as we’ve had to close our businesses for two-and-a-half days now, which has resulted in millions of rand lost a day. We anticipate we will remain closed for the next 24 to 48 hours,” Hudson said.

Looking ahead, Hudson said they remained confident that the ongoing execution of their strategy would enable the achievement of their business objectives.

“We are proud of the progress we have made in the past two years in fixing the fundamentals of the business and positioning Tongaat Hulett for a sustainable future,” he said.

sandile.mchunu@inl.co.za

BUSINESS REPORT