Mauritian conglomerate Terra sees 2014 profit dip 7.2% to Rs 432 mn as sugar prices drop
Mauritian conglomerate Terra Mauricia Ltd saw its profits dipping by 7.2% to hit Rs 432.2 million,upon a drop in sugar prices and the national strike in the sugar industry; while, on the positive side, the energy segment of Terra posted above average results.(Image:terra.c.mu)
Mauritian conglomerate Terra Mauricia Ltd realised a lower profit level for 2014, recording a decline of 7.2% to hit Rs 432.2 million upon revenuedecreasing by 4% from Rs 4.1 billion in 2013 to reach Rs 3.9 billion in 2014, mainly attributable to the sugar cluster which suffered from a drastic drop in sugar prices.
Sugar prices during the period under review dipped by Rs 4000 for a ton, which was partly compensated by a one-off SIFB compensation of Rs 2,000 per ton.
Lower sugar prices and the nation-wide strike in the sugar industry led to a huge drop of 22.5% in the sugar segment revenue, which amounted to Rs 980.2 million in 2014 against Rs 1.3 billion in 2013.Also, the segment recorded losses of Rs 57.2 million, vis-a-vis profit level of Rs 53.7 million in 2013 thus significantly impacting the financial results of 2014.
However, it is to be noted that the sugar segment result would have been much more severe if Ivorian associate Sucrivoire had not contributed positively for an amount of Rs 258.8 million.
The brand’s segment is the major revenue generator accounting for 40.8% of total revenue reported positively with an increase of 6.7% in revenue while the lower profit level was reported upon lacklustre performance of distilling operations, a weak export market as well as abnormally low distilling yields and efficiencies together with adverse market conditions eroding margins.
The energy segment performed particularly well in 2014 with an increase of 60.8% in profit level to reach Rs 212.9 million and is the most profitable clusters of Terrra, upon a record electricity off-take on the part of CEB, a favourable bagasse/coal mix, high operating efficiencies and stringent cost control measures, thus allowing the cluster to achieve above average results.
The financing cost of the company more than doubled in 2014 to Rs 66.8 million and the liabilities side of the balance sheet shed further light on the debt obligations of the company, depicting that long-term liabilities as at December 2014 stood at Rs 1.1 billion against a figure of Rs 783.2 million in 2013.
Shareholder funds amounted to Rs 17.5 billion while earning per share reduced to Rs 1.39 against Rs 1.58 a year-ago.
Currently, the share price of Terra, which is a listed stock on the Mauritian bourse, is at Rs31.40 representing a drop of 4.8% since the beginning of 2015, given that investors view companies dealing in sugar as an unfavourable investment with the prevailing uncertainty in the sector.However, this could mean that they are ignoring the fact that, though sugar has historically been the mainstay of the company, the sugar cluster is no longer the major revenue generator of Terra.