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Business Reporter
ZIMBABWE Stock Exchange (ZSE) listed sugar producer Hippo Valley revenue for the six months period to Septem- ber 30, 2022 increased by 61 percent to $63,1 billion, as milled sugar cane volume grew substantially.
Hippo valley, which is 51 percent owned by South African sugar pro- ducer Tongaat Hulett, saw marked growth in revenue during the period under review despite a 5 percent decrease in industry sales volume.
Resultantly, adjusted earnings before interest, taxes, depreciation and amortisation grew by 63 percent to $18,9 billion.
In the period under review, oper- ating profit retreated by 14 percent to $8,9 billion in the same prior year period. Hippo said it was largely as a consequence of a fair value loss on biological assets of $7,7 billion.
Hippo Valley Estates Chairman Canaan Farirai Dube said, “The impact of this on operating profit was partially offset by an increase in other operat- ing income from $600 million to $3,3 billion.
However, profit for the period decreased by 54 percent from prior year to $2,5 billion due to an increase in the net monetary loss from $200 million to $1,4 billion following the application of hyperinflation accounting.
During the period under review, cane crushed from the company’s plantations (Miller-Cum-Planter) was 12 percent higher than for the same period the prior year. Good deliveries were also backed by relatively better yields, at 107,33 tonnes per hectare compared to 101.22 ton per hectare in the same period last year.
“Cane deliveries from private farm- ers were below prior period largely due to the delayed commencement of harvesting which was caused by the wet weather. Overall, total cane milled was above prior period, however, sugar produced declined on account of lower cane quality,” Mr Dube said.
The drop in cane quality was largely driven by the wet weather which affected normal cane drying-off processes prior to cane harvesting.
Mr Dube added that the factory recovery performances remain above regional industry standards and have contributed to decent cane-to-sugar ratios despite reduced cane quality.
The total sugar produced by the industry for the six months to Sep- tember 30, 2022 was 289 394 tons down from 296 915 tons a year earlier. Hippo’s share of total production to September 30, 2022 was 53,11 percent up from 52,9 percent.
“Total industry sugar sales for the period under review at 212 519 tons were 5,08 percent below the same period prior year due to subdued demand on the back of imports as the market responded to SI198 which allowed duty-free importation of cheaper sugar,” Chairman Dube said.
Total sugar industry export sales for the period increased by 19,31 percent to 35 265 tons due to improved volume allocation on the United States Tariff Rate Quota from the 13 087 tonnes shipped during the same period in prior year to 17 751 tons.
Exports to Kenya, a key regional deficit market, increased to 8 113 tonnes from 5 875 tons in 2021 despite import restrictions instituted to safe- guard its local sugar industry which is registering sustained growth.
However, export sales to Botswana dropped by 23,35 percent to 7 041 tons from 9 186 tons in the same period last year.
According to Mr Dube, this was due to delayed export shipments at the beginning of the season during which the higher-yielding domestic market sales were prioritized.
The season’s total contracted vol- ume to the Botswana market is 15 000t and the Hippo Valley remains confi- dent that this will still be fulfilled.
Hippo Valley declared a dividend for the interim period.
The company in a statement said, “In light of the company’s positive finan- cial performance for the six months ended 30 September 2022, the Board has declared an interim dividend of 0,3 U S cents per share for the year ending March 31, 2023.
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