TimothyBusiness Writer
An improvement in the sales mix, sales volumes and adjustment of retail sugar prices saw Hippo Valley report a plausible set of results for the year ended March 31, 2019.
While comparing revenue figures between the period under review and prior year would paint a misleading picture, Hippo Valley’s sales and production volumes speak to an encouraging performance.
According to a statement accompanying Hippo’s results, there was growth in sugar production, cane crushed as well as sales volume.
“The availability of irrigation water positively impacted cane yields, resulting in the increase in sugar production to 239 000 tonnes (2018: 197 000 tonnes),” reads the statement in part.
A total of 1 862 000 tonnes (2018: 1 534 000 tonnes) of cane was crushed during the season, of which 1 068 000 tonnes (2018: 875 000 tons) was company cane and 730 000 tonnes (2018: 659 000 tonnes) was delivered by private farmers.
In addition, 35 000 tonnes and 29 000 tonnes were received from Green Fuel and Triangle Ltd, respectively.
A total of 239 000 tonnes sugar was produced (2018: 197 000 tonnes), a 21 percent increase from the last season, on the back of improved cane yields.
Total industry sales of 371 000 tonnes (2018: 349 000 tonnes) were realised in the local market, an increase of 6 percent from the previous year.
“Total industry exports to Europe, the US and regional markets increased to 112 000 tonnes (2018: 58 000 tonnes), an increase of 54 000 tonnes due to increased production.
The combination of a favourable sales mix and the price adjustments achieved in the domestic market resulted in an average mill door price for the season of $861 per tonne (2018: $626 per tonne), a 38 percent overall increase.
As a result, revenue for the year amounted to $243,8 million mainly due to the 21 percent increase in sugar production, combined with an increase in fair value adjustment on standing cane (Biological assets for the period under review were valued at $97,9 million up from a value of $43,8 million prior year comparative), as well as the impact of domestic market sugar price adjustments prompted by cost push inflation experienced in the period post October 2018.
As a result, operating profit increased to $67,7million.
Bongani Ndlovu