CFO Rob Aitken is proud of the progress on Tongaat Hulett’s turnaround strategy
Tongaat Hulett embraces new growth initiatives on the back of a 5 percent revenue increase.
Tongaat Hulett’s turnaround strategy has continued to prove fruitful as the sugar producer reported a 5 percent increase to R8.5 billion in its group revenue for the six months ended September 2021.
“Despite a challenging operating environment, I am proud of the progress we have made as an organisation in our turnaround strategy, and the resilience that we have shown,” says CFO Rob Aitken.
He explains that these fruitful results are on the back of the commercial environments within local and global sugar markets being stronger than previous years, benefitting all of the regions Tongaat Hulett operates in.
In Zimbabwe, the group has seen local market sales increase by 23 percent, and Mozambique operations have introduced a range of new pack sizes which have contributed to an 11 percent increase in local market sales.
But while this achievement is definitely something to boast about, Rob is most proud of the progress Tongaat Hulett has made in paying down its debt, which has reduced by 41 percent.
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The group has successfully concluded its fourth debt refinance. “We had concluded our debt restructure in July this year, but the impact of the social unrest in KwaZulu-Natal and other operational challenges necessitated the renegotiation of certain of the debt refinance terms,” Rob explains. “This refinance was concluded while onboarding new auditors and finalising our interim results.”
The South African sugar operations experienced a very challenging six months, faced with various Covid-19 restrictions and the civil unrest. As a result, the group saw its sales volumes for the region at 3 percent lower than the comparative period. “If you recall, the comparative period included the benefit on sales volumes of panic buying, various food parcel schemes, and other outcomes in response to the [Covid-19] hard lockdown imposed,” Rob says.
He adds that milling performance was “disappointing” and that, while some stability has returned to milling operations in the latter part of the season, significant attention has been placed on planning for the upcoming maintenance shutdown commencing this month (January 2022) and ensuring it is well-executed. “We have refocused capital expenditure under a five-year programme designed to sustain and improve all operations.”
Time for a new chapter
Rob says that Tongaat Hulett’s strategy has evolved and that the company sees the next phase of its journey shifting from stabilising to growing the business through several initiatives focused on agriculture, technical excellence, and diversification opportunities – optimising the land portfolio and ensuring that it continues building on operational and ESG initiatives.
“Our efforts to invest in people, capacity and processes continue,” he explains, adding that the group now has a focused and clear strategic intent which revolves around:
- Growing cane and expanding feedstock by 25 percent off its current performance
- Expanding its milling performance by some 30 percent
- Commercialising assets to provide earnings growth
He says that all of this is underpinned by Tongaat Hulett’s people and processes.
“We also believe that through a rights offer of up to R4 billion, Togaat will unlock long-term growth, protect intrinsic shareholder value and create a legacy for the many people dependent on the business across SADC,” Rob concludes.