Africa Brief: Illovo’s record tons of cane, PPC in Africa, Nedbank eyes East Africa and more

Record tons of cane bring Illovo cheers

ILLOVO Sugar reported a 43% rise in headline earnings per share to 189.6c for the year ended March. Illovo delivered a record pro­duction of sugar cane from its own farms of 6.5-million tons, while independent fanners also did well.

Between Illovo’s own farms and independent farmers, nearly 15-million tons of cane was crushed. And they’ve produced 14% more sugar from that cane than the year before with sugar production of 1.75-million tons.

Illovo’s operating profit grew 41% to R1.9bn, while its operating margin increased from 14.7% to 17.1%. The total distribution for the year of 95c represents a 44% increase on the previous year.

Illovo expected a moderate increase in production in the current year and expectations were positive. The group would continue to focus on its cost base and would look to extend its footprint on the rest of Africa. Sugar production contributed 55% to Illovo’s operating profit, while cane growing contributed 40%, and downstream and power generation contributed 5%.

Contributions by country were: Malawi 47%, Zambia 25%, SA 9%, Swaziland 8%, Mozam­bique 6% and Tanzania 5%.

On Friday, Illovo’s main competitor, Tongaat Hulett, reported that revenue grew 19% to R14.4bn for the year ended March, with headline earnings increasing 18.7% to Rlbn.

Tongaat’s total sugar production increased 9% to 1,254-million tons, after increasing 14% in the prior year.

For the full story, read Record tons of cane bring Illovo cheers by Nick Hedley, published by Business Day on 28/05/13

PPC to raise debt to fund foray in Africa

Repairing infrastruc­ture destroyed by civil wars in the Democratic Republic of the Congo is prompting PPC, SA’s biggest cement maker, to double the amount of bond sales this year to help finance expansion in Africa. PPC plans to raise R1.3bn from debt sales this year.

The company, based in Johan­nesburg, met half the target in March by selling three-year floating-rate notes due in 2016 with a coupon of 6.385%.

Proceeds from the bonds will help PPC increase annual production as much as 38% to 11-million tons by 2015 with new plants in Ethiopia and Rwanda. PPC is partnering with China‘s Sinoma International Engineer­ing to build a $200m plant near Kinshasa, the capital of the Congo, to plug a l-million ton cement deficiency. The Congo needs cement to rebuild bridges and buildings destroyed in two civil wars between 1996 and 2003.The value of the bonds to be sold in the second round would probably be about the same as the first auction and it would take place by the end of the year. The weakening rand could mean the yield on the new bonds may be higher in March.

For the full story, read PPC to raise debt to fund foray in Africa by Kamlesh Bhuckory, published by Business Day on 28/05/05

Nedbank eyes East Africa, Mauritius

Funds I Nedbank may start fixed-income funds in Mauritius and East Africa, similar to ones it runs with Old Mutual in Namibia. The funds would hold securities with a maturity of less than 2 half years and may hold $250m-$300m. Nedbank would decide whether to open the fund in Mauritius by the end of the year and by early next year for East Africa. The fund aims to draw investors with dollars and euros that want higher returns for short-term investments than those offered by local banks.

For the full story, read Nedbank eyes East Africa, Mauritius by Bloomberg, published by Business Day on 28/05/05

PSV eyes growth in Africa after units sale

Industrial engi­neering group PSV Holdings yes­terday reported headline earning per share for the year to February from continuing operations of 2.78c from a headline loss of 11.98c the previous year, while the con­tribution from discontinued op­erations fell to 0.88c from 2.12c.

The group’s pump and petro­chemical businesses were sold and disclosed as discontinued operations. PSV said in yester­day’s results statement that it had to rely on business from larger industrial groups in a struggling South African economy.

A loss of R27.1m was at­tributable to the discontinued op­erations which negatively affected the overall result for the year.

The total comprehensive loss for the year was R20.8m compared with a loss of R17.7m last year. PSV bought Turbo Agencies in 2011, which had been established in 1986 in Gaborone, Botswana. The strategy was to make Turbo Agencies more aggressive in its African markets. Turbo Agenices operates in Botswana, Zambia and the Demo­cratic Republic of Congo.

For the full story, read PSV eyes growth in Africa after units sale by Alistair Anderson, published by Business Day on 28/05/13

Investing in Africa: JSE encourages pan-African investment

South African-listed companies are using the JSE to raise capital for their expansion into Africa and else­where, while the JSE has made it easier for African companies to similarly use the South African exchange for their growth strategies. However two factors which are inhibiting inter­est by African companies in the JSE are that foreign interest in African stocks is growing exponentially even without the profile they would attain on the JSE, and 23 African countries have established their own exchanges, which they wish to grow.

Companies are expanding north­wards, National Treasury showed its support for this trend when the finance minis­ter in his Budget Speech relaxed regulations, allowing South African companies to establish one subsidiary in which to hold African or offshore as­sets without foreign exchange controls applying for amounts of up to R750 mil­lion. The hope is that listed compa­nies raise this amount on the exchange to further their expansion strategy So far this year R23.7 billion of new capi­tal has been raised, with Shoprite hav­ing raised R8.2 billion and Mediclinic R5 billion, for various purposes including African and offshore expansion. R80 billion has been raised in each of the past two years, indicating the ap­petite exists.

For the full story, read Investing in Africa: JSE encourages pan-African investment by Eamonn Ryan, published by The Star, Business Report on 28/05/13

Zimbabwe misses mineral royalty target on low global prices

Mining companies in Zimbabwe contributed $13.5m in mineral royalty payments to the country’s fiscus last month, missing the $20.1m target, Finance Minister Tendai Biti said yesterday in his April review report on the country’s economy.

The Chamber of Mines of Zim­babwe wants the government to lower the mineral royalties, which the African Development Bank (AfDB) has already said are exorbitant. Mr Biti blamed the missed target on the softening in international commodity prices.

Analysts said yesterday Zimbabwe’s heavy reliance on mining to boost its economy could backfire as lower commodity prices were expected to persist.

The Zimbabwe mining sector, in which South African platinum producers Implats and Anglo Plat­inum as well as Metallon Gold are dominant players, may miss the 17% projected growth target for this year, experts said yesterday.

For the full story, read Zimbabwe misses mineral royalty target on low global prices by Tawanda Karombo, published by Business Day on 28/05/13

Tongaat’s high output Zimbabwe unit fails to lift profit

Zimbabwe’s sugar exports to the European Union (EU) totalled 202,000 tons in the year to March, while supplies to the domestic market topped 247,000 tons, boosting revenue at Tongaat Hulett’s local unit, Hippo Valley.

Revenue jumped 35% to $174.2m, boosted by “an increase in sugar production and the resultant increased sales volumes”. This was after sugar production at the company’s estates increased 34% to 228,000 tons.

But despite growing output and revenue, earnings per share for the period dropped by 3.8 US cents

Domestic market sales by Zimbabwean sugar producers totalled 258,000 tons compared with 247,000 tons the previous year. Ex­ports to the EU, under existing preferential market arrangements, amounted to 202,000 tons.

Hippo Valley has projected that it will produce about 222,000 tons of the projected industry-wide output. Tongaat Hulett controls 50.3% of Zimbabwe Stock Exchange-listed Hippo Valley.

For the full story, read Tongaat’s high output Zimbabwe unit fails to lift profit by Tawanda Karombo, published by Business Day on 28/05/13

Ethiopia acts to calm fears over Nile dam

ETHIOPIA’S government says it will try to accommodate states concerned that their water supplies may be affected by the damming of the Blue Nile, as Sudanese and Egyptian officials met yesterday on the issue.

Ethiopia, source of one of the two tributaries of the Nile River, will start filling the Grand Ethiopian Renaissance Dam, on the Blue Nile, at the “end of next year”, Deputy Prime Minister Debretsion Gebremichael said in an interview on Tuesday. The $4.3bn hydropower project may begin generating 600MW of electricity next year and is set for com­pletion in 2017, he said.

Once completed, the power plant will be Africa’s largest with the capacity to generate 6,000MW, Egypt, which relies on the Nile for almost all of its water, has historically opposed upstream Nile projects.

The dam, which will be twice the size of Singapore, will be full in “five to six years”, Ethiopian Water and Energy Minister Alemayehu Tegenu said

For the full story, read Ethiopia acts to calm fears over Nile dam by Salma El Wardany, published by Business Day on 30/05/13/

David Okwara

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