Hippo Valley Estates (Hippo) posted a 10 percent growth in sugar production for the six months to September 30, 2021, driven by satisfactory factory performance, following a successful off-crop maintenance programme.
According to Hippo’s management, a total of 162 906 tonnes of sugar was produced by the company, up from 147 960 tonnes produced in the same period last year.
This was a 52,9 percent contribution to the industry’s total sugar production of 308 046 tonnes, up 4 percent from 296 974 in the prior year comparative period.
In the financial statement for the period in review, management said, cane deliveries from private farmers were 42 percent above the same period in the prior year due to increased area harvested to date, benefiting from prior year carryover cane and an earlier start to the harvesting season which began on 20 April 2021.
On its part, the company recorded a 12 percent drop in tonnes of cane harvested to 657 777 compared to 744 672 in the prior year.
Notwithstanding a 6 percent increase in sales attributable to the company, driven by an improved production ratio, revenue dropped by 2 percent to $10,3 billion down from $10,5 billion in the prior year weighed down by currency and inflation dynamics within the country’s economy.
The group’s profit before tax fell by 35 percent to $2,8billion down from $4,3 billion in the same period last year as a result of higher cane costs and increased production costs.
“Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) decreased by 35 percent compared to the same period last year due to higher cane costs incurred on the increased volume of cane from third parties and increased production costs due to the reduced extent of the prior year benefit of forwarding purchasing of key inputs in a hyperinflationary environment,” said management.
The company, however, indicated that the operating profit during the period under review, jumped 12 percent to $2,9 billion over $2,6 billion in the comparative period driven by improved cane pricing assumptions.
Profit for the period retreated 7 percent to $1,4 billion from $1,5billion in the same period last year. Hippo declared an interim dividend of $108 cents per share.
Meanwhile, the company says expansion works on the 4 000 hectares cane development project (Project Kilimanjaro) remain suspended due to delays in concluding funding arrangements with financial institutions pending further clarity on land tenure.
Tongaat Hullets Zimbabwe is working on the funding for completing the already cleared 2 700 hectares for the benefit of local communities while the 562 sugarcane plantation of the prior years is achieving targeted yields as well as generating adequate revenue to meet working capital and loan obligations, added management.
Management said the company was assisting in a number of new sugarcane out-grower development projects both financially and technically and this is ongoing and is expected to yield positive results in the following harvesting season.