MD'S REPORT
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MD'S REPORT
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2019 MD’s Report

 

Not too long ago I asked my youngest daughter whether I could interrupt her television show in the hope of watching the Sharks thump the Hurricanes – wishful thinking on both counts. She ferociously responded in the negative, never taking her eyes off the music video playing on screen, which happened to be a children’s favourite, ‘The Wheels on the Bus go round and round....’. The direction I want to take here has less to do with Man’s eternal deference to his Betters but rather the concept of going round in circles being a less than adequate pursuit.

The current highs being experienced at our manufacturing plants did not come about by chance or a twist of fate. They were the result of deliberately taking an alternative direction in terms of machinery, maintenance, reporting and benchmarking. New capital investments were made with the aim of breaching production records and taking advantage of our privileged position of surplus raw material supply. The consistency and volume of production in the Sugar mill and more recently the Sawmill are unmatched in recent times and are the product of breaking with habit and doing things differently. Similarly, our major gains in the marketplace were the result of radically new initiatives in relation to how and where we sell our range of products. We had to step out of our comfort zone to test new ideas and take charge of our own sales strategy, rather than nestling in the comfort of past practices. These programmes also required substantial investment in new facilities and staffing structures. While such spending may have required a bit of Dutch courage at times, the results speak for themselves.

While preceding changes have brought significant value, we are constantly challenged to find more. The Sugar industry is facing one of its most difficult periods in decades. For various reasons the average price of sugar and sugar cane have fallen dramatically. Millers and growers alike are facing

perilous times unless alternatives to the status quo are found. The Extract market is finite and the Rand is as fickle as ever, meaning we never really know what to expect. Our flat economy and the resulting sluggish building sector remains a burden to our Sawmilling business. Original ideas are required. Currently, we are working on the idea of a manufacturing village in Dalton in an effort to attract industrial users of our products to site. A renewable energy supply concept is being considered for the Extract Factory, which will not only substantially reduce running costs but will also create a new market for the Sawmill and pulp suppliers. We are trying out some diverse crops in the hope of spreading our risk through participation in different markets. In addition, new products are being tested locally and abroad through collaborative partnerships.

Not all of these ideas will necessarily work out but the point that’s hopefully coming across is that we cannot presume to find the answers to future earnings by merrily hunkering down into our routines and betting on the well-worn path. Yes, there are of course many reliable areas of our work which have served us well and will continue to do so, but at the same time we all need to experience that Copernicus moment where new ideas and ways of doing things become the centre of our universe. There is a growing hunger out there amongst suppliers to do something different and I believe UCL can play its part in this process as we have done before. We must not only endeavour to move the needle on existing operations but look for a quantum shift in value creation. To do this we need to take time out away from our daily routine and allocate some thinking towards redirection. The Board recently eliminated a host of agenda items which had become repetitive and replaced these with a session dedicated to strategic intent in the hope that we can better utilise the time and combined talents of UCL.

Notwithstanding our impending mission, we have been pleased with the performance of UCL’s operations during the year under review. While Sugar has lost ground due to the combined effects of increased exports and a declining local market, the financial results of Extract and Sawmilling have shown noteworthy improvements. The farms are engaging an array of cost reduction programmes and our smaller business units continue to do well. The accomplishments of these divisions is in no small measure due to steadfast dedication to a well established set of best practices from the ground up. These activities will remain the foundation from which we engage prospective undertakings.

Managing the company going forward will therefore require a combination of old and new. The classic tactics of ‘diversity’, ‘risk limitation’, ‘controlled gearing’ and ‘vertical integration’ are as relevant today as they always have been. But throw in some millennial thinking, community building and technology fusion and we give ourselves every chance of overcoming the current set of challenges.

Sugar farming | Sugar Manufacturing | Leather Tanning Products | Forestry | Saw Milling

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