Profits for the Zimbabwe Stock Exchange-listed entity Hippo Valley Estates for the year to March 31, 2018 jumped 42 percent to $11 million compared with $7,7 million reported in the prior year despite depressed sugar production.
Operating profit increased 27 percent to $17 million compared to $13,4 million achieved last year.
This was a result of continued growth in local market sales, assisted by the refineries which increased availability of refined sugar for the industrial market.
Hippo also said margins improved due to a favourable sales mix, combined with a swing in standing cane valuation arising from an improvement in the cane age and expected yield of the sugar cane crop to be harvested in the 2018 /19 year.
An attributable profit of 5,72 cents per share was achieved compared to 3,98 cents in the prior year.
At $137 million, revenue for the year was 8 percent lower compared to $148,5 million achieved in the prior year due to decrease in sugar production.
Operating cash flow (after working capital movements) was $32,3 million compared $37,9 million last year, a 14 percent decline in line with reduction in revenue.
Cash generated from operations amounted to $23,5 million from $38 million working capital increased by $12,9 million compared to a $3,1 million decrease in the prior year.
Net debt as at year end amounted to $3,1 million which was a 61 percent improvement on prior year level of $7,9 million. Sugar production for the year was 21 percent weaker to 197 000 tons compared to 229 000 tonnes achieved in the prior year.
“Low dam levels during peak growing periods limited irrigation, which affected cane yields resulting in reduced sugar production,” said Hippo.
However, the sugar manufacturer indicated that standing cane valuations at year end reflect the improvement in the cane crop to be harvested which benefited from optimum irrigation following a satisfactory 2017 /18 rainy season supported by recently completed Tokwe-Mukosi Dam.
A total of 1,534 million tonnes of cane was crushed representing a 11 percent decline from prior year’s 1,730 million tonnes.
Of the total crushed cane, 875 000 tons was company cane, a reduction of 14 percent from last year’s figure of 1 029 000 tonnes.
Private farmers delivered 659 000 tonnes of cane producing 197 000 tonnes of sugar which was 14 percent lower than 229 000 tonnes produced last season.
The period under review also witnessed an increase in local sales as opposed to imports following introduction of Statutory Instrument 64 of 2016 which limited importation of goods that can be produced locally to boost industry.
Resultantly, total industry sales increased 11 percent to 334 000 tonnes.
“The timely intervention by Government to protect industry against competition from dumped world market imports continued to yield positive results in addition to providing job security in the industry,” said Hippo.
Total industry exports to the United States of America and regional markets decreased 62 percent to 58 000 tons on reduced sugar production and increased local sales. Given the normal growing conditions and crop improvements, sugar production is projected to be between 433 000 and 483 000 tonnes in the 2018 /19 season, further growing to 500 000 and 560 000 tonnes in the 2019 /20 season. Hippo declared a dividend of 2 cents a share.