Online Reporter
Michael Tome-Business Reporter
Hippo Valley Estates is bullish about prospects of improved production next year compared to 2024, driven by adequate irrigation resources, optimised operational efficiency and enhanced sugar cane yields.
This comes as Hippo Valley reported positive performance across its key business functions during the half-year period to September.
This projected growth in production is expected to result in improved sales, buoyed by an effective cane delivery system, and enhanced mill recovery rates.
On the sales and marketing front, Hippo noted that the local market’s sugar supply will be sufficient, enabling strong sales, while critical export markets are also projected to contribute positively.
The reinstatement of import duties on sugar is also expected to further strengthen the domestic market conditions.
Hippo Valley believes that this reinstatement, coupled with an adequate supply of sugar locally, will enhance market stability, allowing the company to meet its export commitments without jeopardising local availability.
Going ahead, Hippo Valley identified several key initiatives essential for sustained growth including “Project Kilimanjaro,” which aims to develop an expansive 4,000 hectares of new sugar cane plantations.
According to Hippo Valley progress on this ambitious project has been encouraging, with 682 hectares already harvested.
The Government has also played a supportive role by issuing offer letters to 116 new beneficiary farmers, enabling them to cultivate additional sugar cane on the remaining 3,300 hectares earmarked for development under Project Kilimanjaro.
“With the key business operations having been performing well during the first six months of the year, the company is expecting increased production from prior year and improved sales supported by better yields and cane quality, adequate irrigation water, efficient cane delivery system and improved mill recoveries.
“On the sales and marketing side sales will be driven by adequate sugar supply in the local market and critical export markets, reinstatement of duty on sugar imports and a positive business environment,” said Hippo Valley Estates chairman Mr Canaan Dube said in a trading update for the six months to September 30, 2024.
He also noted that the focus in the second half of the year will be focused on translating increased operational performance into improved cash generation which will maintain a sustainable level of borrowings with a target to reduce cashflow pressures at the start of the ensuing year.
Mr Dube said this approach aims to stabilise and maintain a manageable level of borrowings, specifically targeting a reduction in cash flow pressures as the new year begins.
By focusing on these financial strategies, the Hippo Valley seeks to ensure not only short-term stability but also long-term sustainability in its financial operations.
Despite these positive operational performances, Hippo acknowledged that land tenure remains a crucial area of focus.
In the period under review, the group’s operating profit for the period decreased by 56 percent to US$13,7 million from US$31,1 million in the same comparable period last year, resulting from pricing distortions in the movement of fair value of biological assets, which arose from exchange rate and inflation dynamics embedded in the opening balance prior to it being converted to US dollars.
Following the same effects on fair value distortions, profit for the period decreased by 29 percent to US$18,2 million compared to US$25,6 million.
A total of US$2,5 million was incurred on capital expenditure, with US$0,9 million spent on replanting cane roots and retooling priorities for the business’ key operations.
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