FINANCIAL RESULTS
May 2013
Group Overview
Leading African low-cost sugar
and downstream producer
15 Operations across 6 African
countries
Strong domestic, regional &
preferential sugar markets
Downstream - good local and
strong export markets
12 645 permanent & 18 021
seasonal employees
Illovo operating footprint
Countries where Illovo also markets sugar
2
Group Highlights – 2012/13
FINANCIAL
Operating Profit – R1 901m (↑41%)
Operating Margin – 17.1% (up from 14.7%)
HEPS – 189.6 cents/share (↑43 %)
Interest Cover - 6.8 times (2012 5.5)
RONA – 19.7% (up from 15.9%)
Total distribution 95 cents, up from 66
cents
MARKETS
Sales volumes 1.693mt (↑11%)
Domestic prices increase in line with
inflation except in Tanzania
Good regional prices
EU speciality sugars continue to provide
good premiums
Low cost /duty free imports impacting
Tanzania and South Africa
EU/World prices declining
PHYSICAL
Improved safety performance
Drought recovery in South Africa
Record group cane production 6.5mt (↑ 5%)
Cane from outgrowers 8.4mt (↑ 13%)
Improved factory performance
Sugar production 1.75mt (↑ 14%)
Record Ethanol production
GROWTH
Centralised warehouse in South Africa
operational from 25 February 2013 –
significant logistics benefits and efficiencies
Tanzania Distillery commences production in
July 2013
Various “bolt on” opportunities under
consideration
3
01
Health, Safety & Environment
Achievements in 2013 Season
Safety
awareness
7 sites achieved ZERO disabling injuries for the 12 months
Maragra Factory
0.7
0.61
May-10
Ubombo Factory
0.6
Kilombero Agriculture
0.5
Merebank and Glendale Distilleries
Eston Agriculture
0.4
Umzimkulu Agriculture
0.3
Kilombero Msolwa Factory
DIFR Reduction
0.2
Disabling
Injury
Frequency
Rate (DIFR)
Total Injury
Frequency
Rate (TIFR)
Environment
0.16
Mar-13
0.1
31% reduction in disabling injuries – 61 in 12 months to
March 2013 (previous year 88)
DIFR achieved 0.16 (target <0.4)
All injuries recorded to establish cause and remedy
TIFR achieved 2.4 (target <4.0)
Water footprint project completed in Zambia
Project approved to complete water footprint for all operations
Green house gas emissions measured for 2013/14
4
Group Issues
South Africa
™ Sugar imports / International Trade Administration Commission (ITAC) application
™ Sugar Act Review
Malawi
™ Tough economic environment - currency devaluation significantly impacting inflation
™ Sugar price increases to mitigate input cost increases
Zambia
™ Action Aid Report and Tax Status
Swaziland
™ Future cane development – Outgrower delays
Tanzania
™ Sugar imports / Government Intervention
™ Sugar stocks
Mozambique
™ Outgrower infrastructure
™ Future cane supply
5
02
MOHAMMED ABDOOL-SAMAD
6
Exchange Rates
Average Rates
Full Year 2013
Full Year 2012
Movement
R/US$
8.51
7.45
(14%)
€/US$
1.29
1.37
6%
R/€
10.98
10.21
(8%)
ZMw/R
0.609
0.670
9%
MWk/R
34.53
21.61
(60%)
TZS/R
187.48
216.72
13%
MZN/R
3.42
3.78
10%
Stronger Zambia Kwacha, Tanzania Shilling & Mozambique Metical translation exchange
rates have had a favourable impact on operating profit, offset by a significantly weaker Malawi
Kwacha (currency free-floated May 2012)
7
03
Key Financial Metrics - Group
HEPS (Cents)
R ‘million
2013
2012
11 129
9 173
1 901
1 349
280
245
1 624
1 108
5
(164)
Analysis
873
2013
610
2012
Operating margin (%)
17.1
14.7
Effective tax rate (%)
31.6
30.3
EPS (cents)
190.4
96.4
HEPS (cents)
189.6
2 165
132.6
1 592
+43%
200
190
+18%
150
Revenue
Operating profit
133
112
Net financing costs
100
Profit before tax & non-trading items
50
Material items
0
2011
2012
Headline earnings
2013
% change 2013 vs 2012
60
43%
41%
40
21%
20
EBITDA
0
-20
Return of net assets (%)
-14%
Revenue
Operating
Profit
Finance
Costs
HEPS
19.7
15.9
Interest cover (times)
6.8
5.5
Gearing (%)
21
10
8
Notes to the Financials
Strong cash generation and profitability
2013
Operating profit
Material items
Operating income
Tax Rate Breakdown
2012
1 901.0
1 348.8
4.6
(163.7)
1 905.6
1 185.1
Add back:
Depreciation
239.5
Change in FV of cane roots
(194.7)
(92.2)
Change in FV of growing cane
(391.5)
(144.0)
Impairment of Mali investment
(3.1)
173.5
Other
(8.3)
(13.5)
1 567.9
1 348.4
82%
100%
Cash conversion
2012
31.6%
30.3%
Normal tax
12.6%
15.4%
Deferred tax (Note 1)
16.0%
10.0%
3.0%
4.9%
Withholding tax
259.9
Cash operating profit
2013
Effective tax rate
Note 1
Reversal of portion of deferred tax asset in Zambia
due to assessed loss expiry period
9
04
Operating Profit – Segmental Analysis
R ‘ million
2013
2012
Cane
763
399
Sugar
1 039
803
99
147
1 901
1 349
Downstream & Co-generation
Group operating profit
2013
Co-generation R’ million
External export
power
40
35
Internal export
power
20
17
22
25
37%
48%
Profit from operations
11%
29%
9%
2012
Revenue
2012
5%
2013
40%
19%
9%Operating margin
30%
55%
60%
Cane
Sugar
Downstream & Co-Generation
72%
60%
10
Group Operating Profit Bridge – Actual 2013 vs Actual 2012
Good domestic &
regional pricing
(particularly Malawi) &
improved EU premiums
R’000
Illovo Sugar Group
Operating Profit (R'm)
3,000
2,700
2,400
2,100
931
Sugar production
increased 220kt
(SA up155kt ;
Zambia up 30kt)
1061
48
384
1,500
Devaluation of Malawi
Kwacha offsetting
gains on other
currencies
171
1,800
1,200
Volume and inflation related
increases compounded by
significant increase in Malawi costs
(R588m) due to devaluation of
currency mitigated by lower costs
from South Africa and Mozambique
900
600
Fair Value adjustments:
Higher sucrose prices
particularly in Malawi
(domestic price increases and
weaker fx rate (R321m))
1,349
300
350
Lower furfuryl alcohol
sales (lower demand in
China & EU) and lower
potable alcohol sales
(increased competition
in region from India)
1,901
Actual 2013
Translation losses
FV movements
Downstream & Cogeneration
Costs
Price
Volume
Actual 2012
0
11
05
Fair Value Movements
Standing Cane
Cane Roots
2013
R’m
South Africa
2012
R’m
Movement
year-onyear
R’m
2013
R’m
14
26
(12)
South Africa
Malawi
305
70
235
Zambia
56
0
56
Swaziland
3
37
Tanzania
4
Mozambique
Total
2012
R’m
Movement
year-onyear
R’m
11
11
0
Malawi
131
45
86
Zambia
(6)
(5)
(1)
(34)
Swaziland
14
13
1
18
(14)
Tanzania
32
18
14
9
(8)
16
Mozambique
16
13
3
391
143
247
198
95
103
Total
12
Operating Profit by Country
2013
Operating Profit
Profit from operations
2013
R’m
2012
R’m
1 901
1 349
South Africa
164
9%
89
7%
Malawi
899
47%
531
39%
Zambia
479
25%
446
33%
Swaziland
156
8%
78
6%
Tanzania
94
5%
145
11%
109
6%
60
4%
Mozambique
Mozambique
Tanzania
6%
5%
Swaziland
8%
Zambia
25%
South Africa
9%
47%
Malawi
13
06
Net Debt Reconciliation
R’ million
Opening net debt - 1 April 2012 Actual
724
Operating cash flow
Operating profit from subs and JVs
Depreciation and amortisation
Amortisation of Deferred Income
FV on cane roots
FV on growing cane
Working capital
Net interest paid
Cash tax paid
Dividend income
Ordinary Dividend
(130)
(1 901)
(263)
9
195
392
508
280
196
(2)
458
Investment cash flow
Capital expenditure
Proceeds on disposal of PPE
Investment in future operations
8%
(3)
(119)
447
Closing net debt - 31 March 2013 Actual
1 867
21%
1867
Net Debt at 30 Sept 2012
R2 251 million
724
948
943
(7)
12
Issue of share capital net of associated costs
Preference share redemption
Translation of cash and borrowings
Gearing %
10%
512
2011
2012
2013
Net Debt Balances
14
Analysis of Net Debt
R million
3
1.900
1.800
1.700
1.600
1.500
1.400
1.300
1.200
1.100
1.000
900
800
700
600
500
2
1
4
1.867
114
1
Corporate
• Central warehouse funding (R370m)
• Group pre-export financing (R125m)
294
2
240
Zambia
• Increase in working capital due to unsold
regional stock of 25kt and timing of debtor
receipts over year end
3
495
Tanzania
•Distillery construction (R189m)
•Closing sugar stocks increase by 26kt
compared to the prior year as a result of
low priced imports in the domestic market
(R105m)
724
400
300
200
100
4
Malawi
• Increase in working capital as a result of
the devaluation of the exchange rate
resulting in increased debtor balances
together with slower local market sales
2013
Malawi
Tanzania
Zambia
Corporate
2012
0
15
07
Analysis of Finance Costs
R million
340
320
2
300
1
280
260
240
245
4
3
5
14
42
22
South Africa
1
Increase in net working capital due to increased
sugar production of 155kt
280
25
Malawi
2
16
Increase in interest rates by 20%
Tanzania
3
220
200
Increase in average sugar stock holding as a result
of the continued presence of low priced imports in
the domestic market
180
160
4
140
120
100
80
5
60
40
20
Mozambique
FX losses in the current year due to a depreciation
of the metical against the US dollar from 27.5 to
30.5 impacting US dollar denominated loans.
Corporate
Swaziland external loan refinanced with Group
funding (+R35m)
Mozambique: Group quasi-equity funding replacing
external loan (+R7m)
2013
Corporate
Mozambique
Tanzania
Malawi
South Africa
2012
0
16
Capital Cash Flow
R million
Group Central
Warehouse
400
350
375
Capital Cash Flow 2012/13 Î R943 m
Tanzania
Distillery
Expansion
Ongoing
300
257
South Africa
Merebank boiler, land
development
351
200
150
250
31
62
4
59
58
Zambia
Malawi
South Africa
0
35
16
16
19
7
Mozambique
108
Tanzania
50
90
Swaziland
100
24
Group
250
17
08
GAVIN DALGLEISH
18
Group Sugar Production Bridge – Actual 2013 vs Actual 2012
GROUP SUGAR PRODUCTION VARIANCE
2012 VS 2013
1850 000
Cane
+ 9 100
Sucrose - 7 712
Recovery + 7 161
1800 000
Cane
- 5 805
Sucrose + 1 067
Recovery - 1 411
1750 000
Cane + 22 385
Sucrose + 14 255
Recovery - 6 410
1650 000
155 068
Cane
+ 6 854
Sucrose + 5 726
Recovery + 3 428
1600 000
Cane
+ 14 748
Sucrose + 1 063
Recovery
+ 826
1550 000
16 637
6 149
30 230
16 008
8 549
1746 078
GROUP
Cane
+ 140 650
Sucrose + 65 973
Recovery + 13 720
1500 000
1525 735
Actual 2013
South Africa
Swaziland
Mozambique
Zambia
Malawi
Tanzania
1400 000
Actual 2012
Tons Sugar ‘000’s
1700 000
1450 000
Cane
+ 93 368
Sucrose + 51 574
Recovery + 10 126
19
09
Apr-12
Oct-12
200
150
150
100
100
50
0
Mar-13
250
200
Feb-13
300
250
Jan-13
300
Dec-12
350
350
Nov-12
400
Oct-12
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
0
Oct-12
50
,0
Sep -12
100
,50
Aug-12
Noodsberg
Sep -12
150
,100
July-12
200
,150
Aug-12
250
,200
July-12
300
,250
Jun-12
350
,300
May-12
,350
Jun-12
400
May-12
Sezela
Apr-12
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep -12
Aug-12
July-12
Jun-12
May-12
Apr-12
,400
Apr-12
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
400
Sep -12
Aug-12
July-12
Jun-12
May-12
SOUTH AFRICA
20
Rainfall – South Africa
High rainfall during September – November months has resulted in some cane being carried over
Eston
Umzimkulu
50
0
21
10
South Africa
Good recovery from drought but rainfall above long term mean
at end of season resulted in early close and carry-over cane
2011
2012
2013
266 963
242 184
311 108
Yield tons/hectare – Own Cane
51.8
58.2
71.0
Sucrose % cane – Own Cane
14.6
12.2
13.6
1 059
*915
1 049
81.8
*88.5
81.1
577 639
440 642
595 711
15 885
19 220
17 593
9 013
10 989
10 170
49 825
49 673
49 888
Tons cane - Own Cane
Tons Cane per Hour -TCH
% Capacity utilisation
Sugar Production - tons
Downstream production
Furfural - tons
Furfuryl alcohol - tons
Alcohol - kl
* Umzimkulu Mill closed
22
South Africa
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market - 2013
2%
10% 1%
578
441
2011
2012
200
150
100
50
5%
5%
4%
160
5
61
115
25
113
94
124
0
81
-34
87%
2012
2013
6%
2%
Industry
share
30.4%
92%
Industry
share
23.5%
Overview
•
•
•
•
•
•
Recovery from drought – sugar production increased 155kt
Increased share of industry
Margin squeeze – availability of low-cost sugar imports
Furfural production volumes negatively impacted by lower
crush rates at end of the season
Furfuryl alcohol & potable alcohol sales volumes and
prices lower due to increased competition
Favourable impact of weaker R/$ exchange rate on
downstream profits
Cane
-50
2011
USA
Regional
2013
229
35
By market - 2012
World
596
Operating Profit (R ‘millions)
250
Local
Sugar
Operating Profit Margin
Downstream
23
11
South African cane supply
Supply chain initiatives
Small Scale Growers (SSG)
• Continue mentorship contract with large and small scale
growers & Illovo
• Consolidate SSG on South Coast
• Fully utilise Government grant funding over next 3 years
New Freehold Growers
• Retain and grow mentorship program
• Motivate for Govt re-cap funding
• Motivate for the sale/lease of under performing farms to
other successful farmers
Small Scale Growers (SSG)
MCP
Land Claims
• Illovo mentors & manages disbursement of funds
• Illovo appointed strategic partner to Government
Commercial Growers
• Continue with lease and management scheme
• Pursue Setuse Co-op development
• Introduce a centrally coordinated ripener program
• Free seed cane for new development
MCP
• Introduce resource planning systems
• Promote the lease/buying of additional area under cane
• Resource for seedcane and grower related problems
New Freehold Growers (NFG)
6%
Land Claims
7%
7%
6% 4% 5%
Commercial Growers
6% 4%
4%
21%
23%
21%
58%
63%
2011/12
4.2m tons
64%
2012/13
5.0m tons
2018/19
6.0m tons
24
MALAWI
25
12
Rainfall - Malawi
No significant rainfall impacts on seasonal operations
Malawi - Dwangwa
400
350
300
250
200
150
100
50
A
p
r1
2
M
a
y1
2
J
u
n
1
J
ul
y1
2
A
u
g
1
S
e
p
1
O
ct
1
2
N
o
v1
2
D
e
c1
2
J
a
n
1
F
e
b
1
M
a
r1
3
0
Malawi - Nchalo
400
350
300
250
200
150
100
50
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
July-12
Jun-12
May-12
Apr-12
0
26
Malawi
Good factory performance but production impacted by lower cane
yields at Nchalo
2011
2012
2013
2 133 016
2 065 262
2 102 002
109.3
105.2
104.2
Sucrose % cane – Own Cane
14.1
13.9
14.2
Tons Cane per Hour -TCH
499
500
502
% Capacity utilisation
95.4
95.2
95.6
282 445
283 487
299 494
Tons cane - Own Cane
Yield tons/hectare – Own Cane
Sugar Production - tons
27
13
Malawi
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market 2013
Local
EU
12%
2%
283
282
Regional
299
28%
2011
2012
30
25
33%
15
10
5
0
51%
33
32%
19
20
10
4
12
5
6
7
2011
2012
58%
13%
2%
30%
55%
2013
Overview
Operating Profit (MWk ‘billion)
35
USA
By market 2012
•
•
•
•
•
•
Improved sucrose % cane
Improved factory recoveries
Higher local market sales volumes
Average Kwacha/Rand exchange rate devalues by 60%
Domestic price adjusted to track inflation
Good regional market demand, good EU premiums and
benefit of weaker Kwacha exchange rate
14
Cane
2013
Sugar
Operating Profit Margin
28
ZAMBIA
29
14
Rainfall – Zambia
Unusually dry weather during March and April 2013 has boosted sucrose levels
Zambia – Nakambala
400
350
300
250
200
150
100
50
Apr-13
Mar-13
Feb-13
Jan-13
Dec12
Nov12
Oct-12
Sep12
Aug12
July12
Jun-12
May12
Apr-12
0
30
Zambia
Good factory performance with production > 400 kt
2011
2012
2013
1 974 092
1 886 926
1 942 435
126.8
112.8
122.0
Sucrose % cane – Own Cane
14.5
14.2
14.7
Tons Cane per Hour -TCH
641
645
646
% Capacity utilisation
100
97
96
385 026
373 637
403 867
Tons cane - Own Cane
Yield tons/hectare – Own Cane
Sugar Production - tons
31
15
Zambia
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market 2013
Local
EU
Regional
27%
385
374
404
2011
2012
2013
20%
400
300
14%
200
174
100
180
0
306
47
309
258
231
2012
2013
22%
38%
41%
40%
31%
Overview
Operating Profit (ZMw ‘billion)
21%
By market 2012
•
•
•
78
•
•
Higher sucrose % cane and improved yields
Increased local market sales
Good factory performance despite turbo
alternator being unavailable for a large part of the
season
Good regional market demand at high prices
Benefit of forward cover on export proceeds
-6
-100
Cane
2011
Operating Profit Margin
Sugar
32
SWAZILAND
33
16
Rainfall - Swaziland
Above average rainfall and above average number of rain days particularly during September and
October resulted in an extension of the season length
Swaziland - Ubombo
400
350
300
250
200
150
100
50
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
July-12
Jun-12
May-12
Apr-12
0
34
Swaziland
Expanded factory running well but impacted by above average
rainfall during September and October 2012. Season extended to
complete crop.
2011
2012
2013
723 820
812 846
861 307
Yield tons/hectare – Own Cane
93.6
105.4
103.9
Sucrose % cane – Own Cane
13.4
13.5
13.3
Tons Cane per Hour -TCH
390
432
434
% Capacity utilisation
95.1
86.4
86.8
197 761
224 175
232 723
Tons cane - Own Cane
Sugar Production - tons
35
17
Swaziland
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market 2013
Local
1%
EU
By market 2012
Regional
233
224
198
51%
2011
2012
2013
13%
150
100
50
11%
80
15
65
0
9%
177
22
91
25
77
70
78
50%
50%
Overview
Operating Profit (E ‘million)
200
48%
•
•
•
•
•
Improved factory processes and efficiencies
Good EU premiums achieved and the benefit of
weaker Rand/Euro exchange rate
Co-generation of power with sales to third parties
increasing from 37.8 GWh to 40.5 GWh.
Lower Usuthu Irrigation Project (LUSIP) cane
development continues
Operating margins improve
-4
Cogen
-50
2011
2012
2013
Cane
Operating Profit Margin
Sugar
36
TANZANIA
37
18
Rainfall - Tanzania
Dry weather conditions towards the end of the season negatively impacted on the cane yields
Tanzania - Kilombero
400
350
300
250
200
150
100
50
Mar13
Feb13
Jan13
Dec12
Nov12
Oct12
Sep12
Aug12
July12
Jun12
May12
Apr12
0
38
Tanzania
Increased sugar production as marginal expansion comes online.
Higher sugar stock levels due to low cost imports impacting
domestic market
2011
2012
2013
707 759
660 179
725 671
Yield tons/hectare – Own Cane
78.1
81.7
78.3
Sucrose % cane – Own Cane
13.0
11.9
12.3
Tons Cane per Hour -TCH
229
244
253
% Capacity utilisation
93.5
96.8
99.2
126 824
113 100
129 737
Tons cane - Own Cane
Sugar Production - tons
39
19
Tanzania
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market - 2013
14%
127
113
2011
2012
30
22%
21%
32
3
28
4
10
29
0
Regional
Overview
•
15%
•
20
•
25
•
-5
2012
EU
85%
2013
-10
2011
By market - 2012
100%
20
25
Local
130
Operating Profit (TZS ‘billion)
40
1%
2013
Cane
Increased production as marginal expansion
comes online and carry-over cane crushed
Sales prices decrease year-on-year due to the
availability of low priced imports in the local
market
Sugar closing stock increases by 25kt year-onyear as local market conditions deteriorate
Good progress on construction of distillery with
project supply 100% complete and construction
85% complete
Operating Profit Margin
Sugar
40
MOZAMBIQUE
41
20
Rainfall - Mozambique
Good January rains bode well for the season ahead
Mozambique - Maragra
400
350
300
250
200
150
100
50
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
July-12
Jun-12
May-12
Apr-12
0
42
Mozambique
Factory performance hampered by boiler inefficiencies
2011
2012
2013
454 175
534 905
532 561
Yield tons/hectare – Own Cane
94.7
99.1
90.7
Sucrose % cane – Own Cane
13.6
13.6
13.8
Tons Cane per Hour -TCH
192
217
194
% Capacity utilisation
83.5
94.3
84.3
69 656
90 694
84 546
Tons cane - Own Cane
Sugar Production - tons
43
21
Mozambique
Sugar Production (Tons thousands)
Sugar Sales Volumes
By market 2013
91
70
Local
EU
39%
85
2012
2013
Overview
Operating Profit (MZN ‘million)
21%
386
400
350
250
16%
240
200
100
300
150
100
50
0
2%
19
4 15
2011
140
208
•
•
•
•
•
Yields normalise (no carryover)
Production hampered by mechanical
inefficiencies and lower outgrower yields
Local market prices increased but volumes under
pressure from neighbouring countries
Good EU sales premiums achieved
Operating margin improves on the back of cost
savings achieved
178
Cane
2012
43%
57%
61%
2011
By market 2012
2013
Operating Profit Margin
Sugar
44
GRAHAM CLARK, MANAGING DIRECTOR
45
22
Sugar Sales - Markets
1%
9%
4%
2012/13
23%
63%
Domestic
EU
USA
Regional
World
Segment
2011
(kt)
2012
(kt)
2013
(kt)
Domestic
1 051
973
1 072
264
401
395
28
16
16
187
118
150
86
24
60
1 616
1 532
1 693
EU
USA
Regional exports
World exports
Total sales
2011/12
1%
1% 8%
2010/11
5%
12%
2%
26%
16%
64%
65%
46
Illovo Sugar Markets
99kt
Local markets
• Most important
market boosted by
higher production
volumes
• Domestic pricing in
line with inflation
except in Tanzania
• Lowest logistics
costs
• Best ex factory
returns
• Industrial/consumer
markets
• Tanzania & South
Africa impacted by
low-cost imports
32kt
Regional markets
• Geographic
advantage
• Freight benefits
• Benefit of weaker
local currency
exchange rates on
export earnings
• Destinations
• DRC/GLA
• Kenya
• Zimbabwe
6kt
36kt
EU markets
World markets
• Lower EU volumes
year-on-year
• Niche markets
• Direct
consumption
• Speciality sugars
• Exchange rate
gains as local
currencies weaken
• FAIRTRADE market
developing well
• SA exposure only
• Pricing by SASA
• Increased exposure
as production
recovers from
drought and larger
share of industry
• Lower world market
price as surplus
remains in world
market
47
23
World Market Update – Further global surplus in 12/13
CS Brazil
•
Output finished strong at 34 mt (+9% vs 11/12) due to
excellent weather and higher allocations to sugar
Forecasts for 13/14 range between 35-39 mt, despite a
higher predicted allocation to ethanol . As a result, world
price has fallen to the 17 – 18cts/lb level
•
•
Outlook has improved and production may attain 25 mt
resulting in a small surplus
•
Strong output from China, EU and NAFTA (North America
Free Trade Agreement) and another strong year from
Thailand more than offset small declines in Australia and
Russia
•
The surplus will be eroded in two directions
• China’s import parity window is open and
government have built stocks – will continue
• Increased off-take in MENA (Middle East North
Africa) region encouraged by reduced world price
• India to remain in balance for now but a likely future
importer
India
Other
Conclusion
48
700
45
650
40
600
35
550
30
500
25
450
20
400
15
Refined
Raw sugar: US cents/lb
Refined sugar: US$ per ton
World Sugar Market
Raws
49
24
EU MARKET DEVELOPMENTS
•
•
•
•
•
•
•
•
•
2009/10 sugar shortage (post reform)
World prices Î US30 cents/lb
EU price response Î €450 to €700/metric ton
Current regime ends September 2015 (Beet
quotas / ACP / LDC Preferential access)
Lobbying on regime extension to 2017
Liberalisation of raw sugar imports vs WTO
commitments
Cane sugar refiners established in southern
markets
LDC/ACP access to continue post 2015
Future liberalised EU sugar market
50
Key Projects in Progress
CENTRAL WAREHOUSE
TANZANIA DISTILLERY
85% Complete
Spent R245 million to-date
Ownership: 25 February 2013
Project cost: R367 million
51
25
R4 billion pipeline of development projects
Appraise
Select
Define
Execute
Operate
Project capex forecasts R million
1 600
Zambia co-gen
1 500
Zambia molasses beneficiation
Tanzania Distillery
Furfural development
612
245
Maragra land development
SA Noodsberg marginal expansion
Anerobic Digester
300
64
367
236
SA central warehouse
2012/13
2013/14
2014/15
2015/16
Tanzania Distillery
SA central warehouse
Malawi logistics
Development project capex
Dwangwa factory expansion
Size of the bubble represents the relative spend
52
Prospects 2013/14
Production
¾
Focus on capacity utilisation and productivity with a moderate production increase expected
¾
Good weather conditions which should increase cane production
¾
The extended 2012/13 season in Swaziland will negatively impact average age of cane and
cane yields
¾
Tanzanian Distillery commissioned with commercial production commencing July 2013
¾
Co-generation of power in Swaziland expected to increase by approximately 20%
Markets
¾
Declining world sugar market fundamentals including continued world surplus and low ocean
freight rates are likely to impact export pricing negatively
¾
Continued advantage taken of geographic locations and high in-land transport costs to supply
regional markets
¾
Benefit of SA central warehouse on logistic costs
¾
Niche EU markets and FAIRTRADE
Financial drivers
¾
Currency exchange rates across the group generally depreciating against the US Dollar and
Euro
¾
Continued strong cash flow; lower cost of finance as expansion capital is repaid
¾
Normalised tax rate anticipated
Overall we are confident about another year of progress for the group
53
26