Hippo Valley Estates Limited (Hippo Valley) suffered a marginal decline in sugar production during the six months to September 30, 2020 due to reduced cane quality and deliveries.
The COVID-19 restrictions brought logistical problems which affected delivery of cane to the mill during the six month period.
Sugar production for the period reached 147 960 tons against 152 076 tons realized same period prior year in line with the reduced total cane deliveries to the mill amounting 1 204 140 tons from 1 233 300 tons last year.
The Company’s own cane deliveries amounted to 744 672 tons (2019: 763 386 tons), a decrease of 2 percent, while private farmers collectively delivered 427 831 tons (2019: 469 914 tons), a decrease of 9 percent.
Deliveries from Green Fuel amounted to 31 637 tons.
“Efforts to maximize sugar production through yield improvement initiatives are on-going for both Company owned and Private farmer owned cane fields through strategic partnerships to resuscitate non-productive land to above break-even yields,” Hippo Valley said in its six month trading update.
Work on the 4 000 hectares cane development project (Project Kilimanjaro) being undertaken by the Company in partnership with sister company Triangle Ltd, the government and local banks has seen a total of 2 700 hectares of virgin land being bush cleared and ripped and 588 hectares planted to sugarcane.
“Project works have been slowed down on account of delays in obtaining the requisite funding from financial institutions at the back of adverse economic conditions,” said the company.
Industry cane quality for the period was lower than the prior season resulting in a cane to sugar ratio of 8.14 (2019: 8.11). Initiatives to restore cane yields to optimal levels are on-going, with about 1 370 hectares scheduled to be replanted by 31 March 2021.
However, Hippo Valley revenue for the period increased by 21 percent to ZWL6.9 billion against ZWL5.7 billion realized last year same period largely due to better realizations from export markets.
However, operating profit and profit for the period decreased by 16 percent to ZWL2.6 billion from ZWL3.1 billion in 2019 and by 29 percent to ZWL996 million respectively, weighed down by a fair value loss on cane biological assets of ZWL886 million from a gain of ZWL604 million in 2019.