HARARE – Hippo Valley Estates Limited (Hippo Valley) says it is targeting to export more than 217 000 tonnes of sugar to the European Union (EU), as a way of boosting the company’s earnings.
Last year, the sugar producer — a unit of South Africa’s Tongaat Hulett — supplied over 247 000 tonnes of sugar to the domestic market.
Sydney Mutsambiwa, the Hippo Valley chief executive, yesterday said the company will continue supplying the European market under the preferential market arrangements despite the current low world prices.
“With the changing dynamics in the European Union, the price levels that the industry is achieving into the EU this season are some $0,06 per pound lower than the levels in the last two years,” he said.
Mutsambiwa noted that the company is expecting to ramp up production due to anticipated favourable weather conditions.
“The weather forecasts are indicating that we may have normal rainfall in the 2013/2014 season and this is good news to us. The industry’s sugar production estimate for the upcoming season is 460 000 tonnes and we are expecting our share to be 222 000 tonnes,” he said.
In the full year to March, Hippo Valley’s profit after tax plunged 35 percent to $13,6 million weighed down by an increase in finance costs.
The company’s net debt grew to $40 million up from $33 million.
Resultantly, finance costs grew to $6,8 million compared to $6 million recorded in the same period the previous year.
Depreciation in property and plant equipment went up to $12 million compared to $7,3 million partly contributing to the plunge in profit after tax and consequently earnings per share.
“As a consequence of the decrease in profit after tax, earnings per share dropped to 7,1 US cents from 10,9 US cents achieved the prior year,” said Mutsambiwa
Despite the decline in after tax profit, revenue surged 35 percent to $174,2 million buoyed by an increase in sugar production and the resultant increased sales volumes.