Agriculture and property group Tongaat Hulett expects its future revenue stream to benefit “significantly” from electricity and ethanol developments, CEO Peter Staude said on Monday.

The JSE-listed company said it was working with government to establish an appropriate regulatory framework for electricity generation and ethanol production from sugar cane.

“In the medium term, we remain well on track to get electricity generation from sugar cane established in South Africa,” Staude said, adding that Energy Minister Dipuo Peters’ indication in her latest Budget speech that electricity generation from sugar cane would happen, was encouraging.

The Minister stated that fresh bidding for small-scaled renewable energy projects focusing on technologies such as cogeneration from biomass, including sugar and paper, would get under way soon.

Meanwhile, Tongaat Hulett’s revenue for the year ended March was R12.08-billion, 24.8% above the prior year, mainly as a result of increased sugar production together with improved realisations in the regional and European Union sugar markets. Its sugar output grew by 14% to 1.15-billion tons and included increases of 42% in Mozambique, 12% in Zimbabwe and 7% in South Africa.

Headline earnings rose to R891-million, from R806-million earned in the prior year.

The company reported that the profit from its various operating areas grew by 53% and exceeded R2-billion for the first time.

Profit from the Mozambique sugar operations surged by 198% to R402-million, with sugar production having grown by 42% to 233 000 t.

“Following the previous expenditure on establishing the cane, it is now being harvested and the sugar produced and sold, with the operating cash flow in Mozambique having increased by more than R400-million over the previous year,” the company said in a statement.

Tongaat Hulett’s Mozambique and Zimbabwe operations benefited from higher export realisations and domestic prices in line with regional pricing levels. The Zimbabwe sugar operations generated profit of R621-million, compared to the previous year of R454-million.

Sugar production in Zimbabwe increased by 12% to 372 000 t, with the majority of the increase coming from Hippo Valley.

Operating profit from the South African sugar operations, including the downstream sugar value-added activities, increased by 51% to R354-million.

In Swaziland, the Tambankulu sugar estate’s operating profit recovered to R51-million from R17-million last year, returning to 2009/10 levels. The raw sugar equivalent production increased to 59 000 t, with higher cane yields and sucrose content being achieved.

The cane supplied to all sugar mills increased to 9.6-million tons, while the company’s starch operations benefited from world competitive maize costs and improved coproduct recoveries.

The additional 8 687 ha that were planted during the reporting period in the catchment areas of Tongaat Hulett’s South African mills would largely be harvested for the first time in the 2013/14 season.

Sales into the local market increased by 10% and the sugar producer’s share of industry production increased from 23% to 26%.

Staude said Tongaat Hulett’s drive to increase the cane available for its mills was continuing to build momentum towards fully using its existing milling capacity of more than two-million tons of sugar a year.

At full capacity, sugar production would increase by more than 75% over the 1.15-billion tons reached in the reporting period.

“The strategy to increase cane supply in South Africa is focused on commercial farmers, small-scale farmers and increasing Tongaat Hulett’s influence in cane development through leasing additional land and collaborating with government to rehabilitate cane supply on land reform farms that have gone out of cane,” he said.

As one of the main drivers of revenue and earnings, Staude said sugar production was expected to increase by between 12% and 25% in the 2012/13 season, while it was anticipated that regional sugar prices would be stable and export realisations into the European Union would remain attractive.

The board declared a final dividend of 170c a share, bringing the yearly dividend to 290c a share.