* Rand currency hit more than five-year low
* Reserve bank has hiked rates
* Costs put pressure on consumers, importers
JOHANNESBURG, Feb 9 (Reuters) - For corporate South Africa, the tumbling rand has been both a blessing and a curse: a windfall for mining houses, it has also saddled domestic manufacturers and retailers with higher costs and weaker consumer demand.
The currency free fall has left a raft of companies - including mobile operator Vodacom and the local arm of Toyota Motor Corp - scrambling to contain the damage. The government says it may even need to step in to support drugmakers.
For exporting mining companies such as AngloGold Ashanti and firms with extensive overseas revenue, such as media group Naspers, the weaker currency appears to be an unequivocal positive, boosting profits when overseas earnings are brought home.
Yet that's just half the story, according to Dennis Dykes, chief economist at Nedbank in Johannesburg.
"Even on the export side, it leads to higher inflation, higher fuel costs and higher capital goods costs," he said.
"It's not a complete no-brainer, even for the exporters."
The impact is even worse for companies focused on the domestic economy, who are stuck with higher costs without the benefit of foreign exchange revenue.
Battered by the global retreat from emerging markets and worries about the fragility of Africa's largest economy, the rand hit a more than five-year low last month, even as the central bank raised its benchmark rate to 5.5 percent from 5 percent.
It is down about 8 percent this year, after an 18 percent slide in 2013.
Vodacom Group, the South African unit of Britain's Vodafone Plc, is negotiating with its global suppliers to bring down prices because of the weaker rand, Chief Financial Officer Ivan Dittrich said on a call with analysts this week.
The bulk of its capital expenditure and a "meaningful" amount of its operating expenses, particularly network costs, are denominated in foreign currencies, he said.
"It's a pity," Vodacom Chief Executive Shameel Joosub said on the conference call. "Because obviously we could get more equipment if the rand was more stable."
While Vodacom hedges its rand exposure and has some operations outside South Africa, it reaps more than 80 percent of its revenue from home, unlike rival MTN Group, whose vast African and Middle-Eastern operations ensure a big lift from the weaker rand.
Adcock Ingram, a drugmaker largely focused on the domestic market, has also been squeezed by a spike in expenses.
South Africa's second-largest pharma company, Adcock warned last month first-half profits will likely fall by at least 20 percent, citing pressure from inflation, including higher wages, and the increased cost of importing drug ingredients.
The rand's fall could prompt Pretoria to increase the price caps it sets for drugs, said Anban Pillay, the deputy director general at the Department of Health.
"If the rand continues to slide, certainly the case for that becomes stronger and stronger," he said, but declined to say how much the currency would have to decline to trigger an increase.
The last time the government allowed such a price hike was in 2008, when the rand tumbled by as much as 73 percent before finishing the year down by more than 50 percent.
Toyota's South African unit is trying to balance higher costs with the need to remain competitive, something that is becoming increasingly difficult, said local chief executive Johan van Zyl.
"This type of weakness we've seen over the last few months is so dramatic that it will definitely have an impact on vehicle pricing," he told Reuters.
Higher prices of cars, food, fuel and medicine are further bad news for South Africa's debt-laden consumers, who now must also deal with the increase in interest rates.
Data in December showed that consumer spending in the third quarter grew by a lacklustre 2.3 percent, from 2.8 percent in the second quarter.
Household debt is equal to just over 75 personal income, making shoppers, particularly lower-income ones, highly sensitive to any price rises.
That's also bad news for retailers such as Shoprite and Wal-Mart Stores Inc unit Massmart, which have seen their share prices hit over the last six months on worries about consumer spending.
"We've gone and hiked interest rates in the hope that will stabilise the rand," said Abri du Plessis, chief executive officer at Gryphon Asset Management in Cape Town.
"But the only thing I can see that it is going to do is kill the economy even further."