Tongaat Hulet How’d they do that?
Demonstrating the virtues of diversification this week are Tongaat Hulett, who turned in an acceptable set of results despite the relentless northeasterly headwinds experienced by their flagship sugar division, which was horribly hit by drought in the canelands of KZN, and a scarcity of water and electricity in Zimbabwe and Mozambique, and saw volumes down by 22%, and operating profits by 85%. Overall, Group revenue declined 3.2%, while operating profit fell 13.5% to R1.8bn. Saving the business from total oblivion this time around were the starch and glucose value-added operations, and the property-development business, which continues to turn waving canefields into golf estates and light industrial developments, sometimes in uncomfortable proximity to each other. In these areas of the business, apparently, record growth was experienced. “It’s like two sides of the same coin, but different,” said CEO and Zen Master Peter Staude.
Comment: And that, ladies and gentlemen is how you hedge.