2026 Report
The weakening trade conditions in UCL’s Sugar and Wattle Extract markets, which started in 2025, worsened throughout 2026 and have deteriorated even further during the opening quarter of the 2027 financial year. Such periods of decline are an inevitable part of the business cycle and it is for exactly that reason that the Board has committed substantial resources towards improving the company’s ability to maintain performance during difficult times. The past year again demonstrated both the strength of our business model and the importance of continuing to invest for the future, even during periods of considerable uncertainty.
Growth in Sugar milling output and the resulting short-term returns have meant the company was able to maintain good operating profits, albeit below initial expectations. Revenue increased by 5.7% to R2.63 billion despite the declining core markets. However, weaker world Sugar prices, depressed international Wattle Extract demand, a stronger Rand, higher interest costs and the continued influx of imported Sugar into South Africa placed significant pressure on profitability. As such the Board has reduced the dividend payment to 8c per share. The company expects to reach peak borrowings during the current financial year after which it will consolidate and allow recent investments to yield the planned benefits.
The current environment facing South African agriculture is among the most complex I have experienced during my years on the Board. International geopolitical instability, volatile exchange rates, rising funding costs, changing global trade relationships and market uncertainty continue to test agricultural businesses across every sector.
Domestically, the Sugar industry continues to suffer from delays in the review of import tariff protection, resulting in increasing volumes of imported Sugar displacing locally produced product. Concurrently, global leather markets have weakened considerably, creating difficult trading conditions for our long-standing Wattle Extract business.
Yet it is precisely during periods such as these, that the value of UCL’s diversification strategy becomes most evident. For many years the Board deliberately pursued a vision of building complementary businesses capable of supporting one another through changing economic cycles. Other than our primary focus on the Sugar mill, investments made into strengthening the sawmilling and accompanying farming operations, developing our trading division and establishing a world-class Avocado business have been made to ensure that future generations inherit a stronger, more resilient business than the one we inherited ourselves.
The Sugar division continues to illustrate what can be achieved through technical excellence and stakeholder collaboration. During the period under review, the factory processed a record 1.14 million tons of Cane while producing over 120,000t of Sugar. Following further upgrades in crush capacity, the targets for the new season have been substantially increased to 1.4 million tons of Cane and 160 000t of Sugar, respectively. The following year will see further improvements still. While costly, this expansion has fundamentally altered the company’s strategic outlook for the better and positions UCL favourably for many years to come. In recognition of the Sugar division’s contribution, the Board has approved a base supplementary price enhancement of R100 per ton RV delivered.
The year gone by saw the continued strengthening of governance across the company. The Board has consciously embraced modern corporate governance principles while maintaining the practical decision-making culture that has always characterised UCL and allowed it to be more responsive and aligned with its immediate realities. The Audit, Risk, Environmental and Sustainability, Social and Ethics and Suppliers’ Forum Committees continue to provide valuable oversight while supporting management in navigating an increasingly complex operating environment.
Perhaps even more importantly, our culture has remained firmly rooted in people. UCL has always recognised that maintaining success depends not only on financial performance, but also on investing in its employees, supporting suppliers and contributing positively to the communities within which it operates. Finding innovative ways to support farmers both on-farm and through access to value adding processes, will in turn serve the company well. The introduction of enhanced employee wellness initiatives, continued investment in apprenticeships, graduate development and education, together with all the subtle contributions to employee welfare demonstrate that commercial success and responsible corporate citizenship can, and should, progress in unison.
It is also worth reflecting on the unique structure of UCL. Unlike many corporations, the company’s shareholders are also its suppliers. Their prosperity is directly linked to the success of the business, while the company’s success depends equally upon the continued commitment of growers to reliably supply quality raw materials. This relationship creates an alignment of interests that has served UCL exceptionally well over many decades and remains one of UCL’s greatest competitive strengths. This partnership has navigated countless challenges that at times may have appeared insurmountable, each time strengthening the organisation.
Having first joined the Board of UCL in 1998, I have been privileged to serve as Chairman since 2007. This Annual Report marks the conclusion of my journey as a director of UCL, which spanned almost three decades. It has been my honour to serve this extraordinary company, its suppliers, shareholders, employees and the broader communities we support. I have witnessed UCL transform from a successful regional agricultural processor into one of South Africa’s most diversified and progressive agricultural business, positioned for continued growth in sectors that scarcely featured three decades ago.
While much has changed since then, the values upon which this company was built - integrity, stewardship, innovation and commitment to our suppliers, remain firmly intact. I am confident that UCL is on the right path in meeting its mandate of continuously serving the best interests of our farming communities. The company’s achievements would not have been possible without exceptional people. I express my gratitude to my fellow Board members, both past and present, management and staff and the people of our surrounding communities who have supported UCL throughout its remarkable history and have shared in both its successes and hardships.
While challenges will always appear, the foundations have never been stronger. I leave knowing that UCL remains true to the principles that have defined its legacy for over one hundred years, while confidently embracing the opportunities of the future.
CE KLIPP