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Hippo back in the black on low imports

Business
Listed sugar concern, Hippo Valley Estates Limited, is back in the black after posting a $7,7 million profit during the year ended March 2017 from a $8,8 million loss in the comparable period last year on the back of better pricing and low imports into the market.

Listed sugar concern, Hippo Valley Estates Limited, is back in the black after posting a $7,7 million profit during the year ended March 2017 from a $8,8 million loss in the comparable period last year on the back of better pricing and low imports into the market.

BY FIDELITY MHLANGA

Hippo Valley Sugarcane

The company’s revenue surged to $148,5 million from $116,8 million during the same period last year.

“Local market sales saw better pricing and sales mix dynamics due to very low imports into the market and an increased offtake of sugar for refining by one of the major industrial customers. A total of 301 000 tonnes was sold in the local market from 289 000 tons a 4% increase despite liquidity challenges facing the economy,” the company said in a statement accompanying its financial results.

“The interventions by government to protect the industry against unfair competition from imports continued to yield positive results whilst securing jobs in the industry.”

Hippo Valley said sugar production increased to 229 000 tonnes from 204 000 tonnes same period last year.

“The 12% volume increase is largely on account of an 11% increase in cane deliveries from private farmers and a 6, 8% improvement in the cane to sugar ratio which was positively impacted on by the dry weather conditions that favoured sucrose accumulation at the expense of bio mass accumulation,” it said.

A total of 1 730 000 tonnes of cane was crushed during the period from 1 660 000 tonnes in 2016.

According to Hippo Valley cane plough out and replanting programmes, which had been suspended in October 2015 due to low dam levels and consequently inadequate water for irrigation, resumed in February 2017 after the industry dams had gained sufficient irrigation water following good rainfall received during December 2016 and January 2017.

“The results were achieved under challenging operating conditions characterised by reduced irrigation water, worsening liquidity and foreign currency shortages within the country. The recently completed Tokwe-Mukosi dam has diversified the water catchment area for the sugar industry and provide substantial with respect to irrigation water requirements for future growth of the industry,” it said.

The company’s net debt at March 31 2017 amounted to $7,9 million which was a 77% improvement on the prior year level of $35 million.

A total of $4,4 million was incurred in finance costs compared to $6,4 million incurred in the prior year in level of borrowings all of which were unsecured.

The company said an early season estimate for total industry sugar production in 2017/2018 was between 421 000 tons and 440 000 tonnes compared to 454 000 tons in 2016/2017.The 2017/2018 crop would be impacted by the reduced irrigation and limited replanting that was necessary during 2016, it said.

“The current dam levels following the good rains received at the end of 2016 into 2017 will provide full irrigation during 2017/2018 leading to a significant crop recovery by 2018/2019. Sugar production is expected to progressively recover over the coming 2 years, to between some 535 000 and 570 000 tonnes by 2018/2019,” Hippo said.