Hippo Valley revenue up

HARARE - Zimbabwe's largest sugar producer Hippo Valley (Hippo) has recorded an 18 percent increase in revenues to $82,9 million in the half year to September up from $70,2 million in previous corresponding period in 2015.

Hippo chairman Murray Munro yesterday attributed the growth in revenues to increased sales in the period under review.

“Total sales volumes for the period to September 2016 amounted to 257 356 tonnes compared to 247 085 tonnes in 2015, an increase of four percent, with the company’s share amounting to 139 413 tonnes against 124 211 tonnes last year,” he said.

The Hippo boss noted that operating profit and profit for the period amounted to $3,9 million and $1,4 million compared to $5,7 million and $2,1 million registered last year.

“This reduction was caused by a higher proportion of exports, at prices below local market prices, and a higher level of out grower cane payments compared with the first half of last year,” Munro said.

The Tongaat Hulett subsidiary saw its operating cash flow before working capital for the period under review decreasing to $23,1 million from $30,9 million as a total of $3,6 million was released from working capital compared to an absorption of $18,8 million prior period.

This was mainly due to lower stock-holding and higher creditors in the current year compared to the previous period.

Munro added that capital expenditure was below last year and this was further impacted by the significant reduction in sugarcane root planting costs in response to the drought conditions.

In the six months period, Hippo’s net debt decreased to $12,2 million from $33,6 million.

Sugar production for the period under review stood at 155 522 tonnes marginally down from the 157 877 tonnes recorded for the same period last year.

“This was a satisfactory outcome considering the late start of the milling season and the resultant lower cane deliveries to the mill over the period… amounting to 1165 432 tonnes compared to 1 303 899 tonnes delivered same period last year, a decrease of 11 percent,” Munro said.

The positive outturn in production, he said, was largely due to improved cane quality and the resultant favourable cane to sugar ratio.

“The company’s cane deliveries amounted to 663 949 tonnes compared to 754 254 tonnes, a decrease of 12 percent, while private farmers collectively delivered 501 483 tonnes, nine percent down from the 549 645 tonnes delivered last year,” Munro added.

Going forward, the group says it will continue enhancing its strategic positioning, focusing on multiple strategic thrusts, all with a positive impact on earnings and cash flow, through various cycles that the business experiences, to extract higher returns from its existing asset base.

Some of the key points of the strategic positioning include creating multiple strong sugar market positions with a domestic market focus, growing sugar production for the current low point and reducing the cost of sugar production.

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