SOUTH AFRICA: Sugar companies seen riding out crisis
Published: 08/30/2010, 10:52:34 AM
South Africa's two leading sugar companies - Illovo Sugar and Tongaat Hulett - are expected to remain resilient despite volatility in commodity prices, according to South Africa's Business Day.
Nontando Sibanda, analyst fro Pan-African financial services group Imara and author of the report, said that the depressed economic growth rates and volatility in commodities prices posed a real threat to the industry.
However, Illovo and Tongaat stood a good chance to weather the storm and remain strong because of the expected increased output from their southern African operations.
Imara group CEO Mark Tunmer said the sugar industry was important as a major employer. Listed sugar businesses were major employers.
"It is therefore important for investors to monitor industry prospects. We believe sugar sector data will fill a big need among South African and international fund managers and institutions," said Tunmer.
The report also warns that the strengthening of the rand may offset returns from the regional markets.