Illovo, a unit of Associated British Foods, is Africa's biggest producer of sugar and a prime beneficiary of a new EU trade regime that allows producers of sugar in developing countries to export to the EU duty free from October 1.

The company has also embarked on an expansion programme - powered by a R3-billion rights issue - at its operations in Zambia, Swaziland, Mozambique and Mali that will increase output across the group by about 200 000t to about 1.78million tons this year.

"The bulk of our expansions, other than in Mali, will generally send the surplus sugar to Europe," Graham Clark said when the company released its interim results.

"Currently, we're exporting between 150000t and 160 000t, and we'd be probably looking to double that in the next four to five years."

Clark said Illovo expected global sugar prices to stay at their current highs for "the next couple" of years, aided by a global deficit of the sweetener due to lower output in major markets.

"Our view is that we're probably going to see these firmer prices for the next couple of years and then prices will reduce beyond that," he said.

"We see the 20c-a-pound level for the next few years, and then three to five years out we see the price coming off to 15c to 16c a pound."

Illovo reported a 3% fall in first-half headline earnings a share yesterday, and said it expected full-year headline EPS to fall by between 10% and 20% compared with last year because of its rights offer. It said headline EPS dropped to 106.5c, weighed down by a higher effective tax rate.

First-half cash operating profit rose by 39% to R862.3-million and revenue rose 27% to R8.6-billion. An interim dividend of 32c a share was declared.