Illovo year earnings down on drought

JOHANNESBURG – South African group Illovo Sugar posted a 34 percent drop in full-year earnings, hit by drought and exchange rates.

Illovo, a unit of Associated British Foods and Africa’s biggest sugar producer, said on Monday it expected operating profit to improve this year.

Diluted headline earnings per share for the year to end-March fell to 112.2 cents. Headline earnings are the main profit gauge in South Africa and exclude certain one-off items.

Illovo shares were down 1.4 percent at 1055 GMT, compared with a 0.1 percent lower all-share index.

Managing director Graham Clark told Reuters the drought’s impact on South African production would be felt throughout the current financial year, adding the country only accounted for 14 percent of group operating profit.

While Malawi’s contribution to group operating profit was 41 percent and Zambia’s was 24 percent, strong local currencies squeezed margins, preventing Illovo reaping more benefit from a rebound in global sugar prices.

Looking at financing costs, Clark said the company was monitoring interest rates in South Africa and elsewhere in the region which were expected to enter a tightening cycle later this year or next.

Group revenue fell to 8.1 billion rand from 8.5 billion. The company has also has operations Tanzania and Mozambique and is investing outside the region in the west African nation of Mali.

Sugar production was 2.7 percent lower at 1.639 million tonnes.

In lieu of a dividend, Illovo declared a final capital reduction distribution

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