Power challenges that slowed irrigation combined with a dry spell during peak growing period of October 2019 to March 2020 impacted negatively on cane deliveries for sugar producer, Hippo Valley Estates Limited during the year ended 31 March 2021, the company has said.
As a result, sugar production fell by four percent at the back of lower than expected mill efficiencies and inclement weather conditions (incessant rains) which impacted cane quality.
Worse still, the wet spell in December 2020 interrupted the harvesting programme resulting in a total of 555 hectares for both the Company and private farmers being carried over for harvest in the 2021/22 production season.
The Company’s share of total industry sugar sales volume of 440 000 tons (2020: 413 000 tons) for the year under review however managed to move up by 2 percentage points from 2020 levels to reach 50 percent.
Despite the drop in output, the company managed to rescue the situation by posting an impressive export performance to boost earnings.
“Total revenue for the year increased by 34 percent to ZWL$ 16.8 billion (2020: ZWL12.5 billion), largely due to the increased export volumes,” the company said.
Operating profit and profit for the year decreased by 28 percent to ZWL3.8 billion (2020: ZWL5.3 billion) and by 58 percent to ZWL1.1 billion (ZWL2.6 billion) respectively, weighed down by a fair value loss on biological assets of ZWL1.1 billion (2020: gain of ZWL1.7 billion).
“This was due to a drop in forecast cane price at current purchasing power from prior year,” said Hippo Valley.
However, excluding the non-cash impact of biological asset valuations and depreciation, adjusted EBITDA improved by 26 percent as the Company benefited from prudent management of costs and the positive impact of forward purchasing of key inputs in a hyperinflationary environment.
The Board declared and paid an interim dividend of ZWL121 cents per share during the year ended 31 March 2021.
Meanwhile, work on the 4 000 hectare cane development project (Project Kilimanjaro) being undertaken by Tongaat Hulett Zimbabwe in partnership with Government and local banks, has seen a total of 2 700 hectares of virgin land bush-cleared and ripped, and 562 hectares planted to sugarcane.
