Hippo Valley Estates recorded an eleven percent decline in sugar output to 212 000 tonnes in the full year ended March 30, 2020 due to a decline in the volume and quality of cane.
During the corresponding period in 2019, the company, which is owned by South Africa’s sugar producing firm, Tongaat Hulett, produced 239 000 tonnes.
In its 2020 annual report, Hippo Valley said output for the year contributed 48 percent to total industry sugar production.
“A total of 212 000 tonnes of sugar were produced (2019: 239 000 tonnes) by the company contributing 48 percent to total industry sugar production,” it said.
“The production decrease of 11 percent from the last season was due to a decrease in both the volume and quality of cane resulting in a cane to sugar ratio of 8.0 compared to previous season of 7.8.”
A total of 1,7 million tonnes of cane were crushed during the season, of which one million tonnes was company cane and 700 000 tonnes were delivered by private farmers.
Last year, Hippo Valley crushed 1,9 million tonnes of which 794 000 tonnes were delivered by private farmers and other third parties.
The company said cane plough-out and replanting programmes aimed at restoring cane yields to optimal levels continued during the year with some 690 hectares (2019: 1 670 hectares) having been replanted.
Total industry sales in the local market decreased by 13 percent to 324 000 tonnes (2019: 371 000 tons) as a result of a decline in demand due to erosion of disposable incomes.
“Timely adjustments of local sugar prices in line with inflation have been successful in maintaining margins, minimising speculative trading and illegal exports to neighbouring countries, practices historically common in hyper-inflationary environments.
“Due to infrastructural damage and other logistical challenges occasioned by Cyclone Idai, which impacted exports via Beira, industry export volumes decreased to 89 000 tonnes compared to 112 000 tonnes exported in prior year, representing 22 percent of total sales volumes (2019: 23 percent),” said Hippo Valley.
The report indicates that prices on both regional and international export markets were on average 17 percent higher than prices achieved in prior year. Total revenue for the year amounted to ZWL$3,7 billion compared to ZWL$2,5 billion in 2019, an increase of 48 percent despite a 14 percent decrease in sales volumes.
This was due mainly to the industry successfully optimising the market mix in the local market and better realisation from export markets.
“As a result, profitability improved by 200 percent. Net operating cash flow after interest, tax and working capital changes increased to ZWL$378 million (2019: ZWL$280 million) despite higher tax payments during the period under review.” The Chronicle