Low-cost sugar imports hurt local producers

Low-cost sugar imports are denting market prospects in South Africa and Tanzania and more effective tariff protection and market management were required, JSE-listed Illovo said on Monday.

Firm’s managing director Graham Clark said the group, which sells 60 per cent of its sales volumes into domestic markets in the countries where it operates, had lodged an application to address the tariff level in South Africa. 

The company also applied for better regulation of imports into Tanzania. “Without effective tariff protection and/or market management, prospects in these markets remain constrained,” he said. 

Illovo on Monday reported a 43 per cent increase in headline earnings a share of 189.6c for the year ended 31 March, 2013, as group cane crop yields reached a record 6.475 million tonnes, and improved sales prices were realised in each of the company’s market segments.

Operating profit increased by 41 per cent to R1.9 billion (Sh360 billion), which the group attributed to intensified cost control efforts and the subsequent 17.1 per cent increase in operating margin.

Clark said the 2012/13 season had demonstrated favourable weather conditions, which drove record cane crop production and operational efficiencies.

Illovo’s sugar production division contributed 55 per cent to operating profit, while the cane-growing division contributed 40 per cent, and the downstream and power generation division contributed 5 per cent.

Following the previous year’s drought, a notable cane production increase was reported in South Africa, while Zambia and Swaziland benefited from recent factory expansions.

Total cane production from independent farmers had also increased, with 8.4 million tonnes having been delivered to Illovo’s factories over the year. This resulted in the group’s total sugar production increasing over that of the previous season by 14 per cent to 1.75 million tonnes.

Improved sugar availability bolstered an increase in sales volumes by 11 per cent year-on-year, while improved sales prices yielded an increase of R1.9 billion in sugar revenue.
Source: The Citizen, reported from Johannesburg
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