HIPPO VALLEY Estates, a unit of South Africa’s Tongaat Hulett, gross profit for the full year to March declined to $74 million from $84 million due to an increase in costs and lower cane deliveries, the company has announced.
REPORT BY BERNARD MPOFU
Despite experiencing lower than expected cane output, the company also announced that sugar production was up 28% to 475 000 tonnes during the period under review buoyed by cane deliveries from private and third party farmers.
“A cost increase of some 10% was experienced in the milling operations and in the own estate agricultural services,” the company said.
“In addition, the quantum of increase in cane values reported in 2011-2012 was not repeated in 2012-2013. Planting activities were curtailed in the latter part of the season due to dry weather conditions culminating in fewer hectares under cane at the end of the year.
“The weaker Euro/$ exchange rate impacted negatively on export proceeds while the weaker average rand/$ impacted positively on the conversion of $ profits into rands.”
The local operation was ahead of the Mozambique unit whose output was again negatively affected by unfavourable climatic conditions.
Overally, the group’s profit from operations was up 11,7% to R1,9 billion. The company, which is currently one of government’s target under the indigenisation and empowerment regulations compelling foreign-owned firms to surrender controlling stakes to locals, said it would this year step up its efforts to empower the local community.
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Hippo Valley, a Zimbabwe Stock Exchange-listed manufacturing concern, is 53,3% owned by Tongaat Hulett.
“A central part of this recovery is the substantial development of indigenous private cane farmers. As at the end of the 2012-2013 season, at least 670 active indigenous private farmers, farming some 11 200 hectares and employing more than 5 600 people, supply.
850 000 tons of cane which generates $56 million in annual revenue for them. Zimbabwe, with Tongaat Hulett as a partner, has the potential to further develop indigenous private cane farmers substantially. This potential is linked to how much annual production can be achieved from existing sugar mills,” the company said.
“From the existing sugar mills. Based on Tongaat Hulett’s view of its existing mills, a further 600 farmers on 12 700 hectares could supply an additional 1,4 million tons of cane per annum. In total, all these indigenous private cane farmer developments could earn more than $140 million gross revenue per annum and employ more than 12 000 people.”
