mbulelo smpofu
Judith Phiri, Business Reporter
LEADING sugar producer, Hippo Valley Estates Limited has announced a 24 percent increase in revenue, attributed to a robust recovery in local market sales volumes facilitated by the Government’s reinstatement of import duties on sugar imports.
In a statement accompanying the company’s financial report for the half-year ending September 30, 2024, Hippo Valley Estates chairman Mr Canaan Dube noted that the re-imposition of duty on sugar imports has significantly supported the recovery of the local market.
“Twenty-four percent increase in revenue was recorded to US$102,6 million (2023: US$82,7 million) after a strong recovery of local market sales volumes where higher price realisations are generated and the deliberate prioritisation of the local market in place of the lower priced exports which saw a 69 percent volume decrease,” he said.
“The local market recovery was supported by the re-imposition of duty on sugar imports and the heightened awareness initiatives that promoted the Huletts sugar brand. Critical export sales volumes are still expected to be fulfilled with no impact on the planned local market prioritisations.”
He said following the repeal of Statutory Instrument 80 of 2023 on 31 January 2024, import duties were reinstated on low-cost non-fortified imported sugar brands that had resulted in an erosion of the local sugar industry market share by as much as 25 percent.
Mr Dube said resultantly, the industry’s customers have largely switched back to locally produced sugar, with the domestic market industry sales volumes recovering by 31 716 tonnes.
“There are adequate sugar stocks to satisfy demand locally and meet critical export markets requirements, even after the earlier closure of the crushing season at the end of November.
“While prioritisation of the local market remains key, export market sales volumes were largely affected by delays in obtaining shipment approvals from the United States of America (USA) authorities which has since been delivered and paid for post the reporting period. Unfortunately, unfortified sugar brands not compliant with regulations are still being illegally imported and relevant authorities have been alerted,” he said.
Mr Dube said agriculture and manufacturing, their main business operations, recorded a 12 percent and eight percent growth in cane harvested from the company’s plantations (Miller-Cum-Planter) and sugar production respectively.
He said this improvement in sugar production was largely driven by a combination of higher yields, a more consistent rate of delivery of sugar cane and improved mill uptime after a successful off-crop (annual) maintenance programme which ensured more plant reliability.
“Private Farmer performance increased following early cane deliveries, unlike the prior year that was affected by delays emanating from the late conclusion of cane supply agreements.”
Mr Dube said with the key business operations having been performing well during the first six months of the year, the company was expecting increased production from the previous year and improved sales supported by better yields and cane quality, adequate irrigation water, efficient cane delivery system and improved mill recoveries.
“Focus in the second-half of the year remains to translate increased operational performance into improved cash generation and resultantly maintain a sustainable level of borrowings with a target to reduce cashflow pressures at the start of the ensuing year.”
Mr Dube gave assurance that they had adequate sugar stocks for the remaining six months including meeting all sugar sales requirements before the commencement of the next season, covering both the domestic market and critical export market demands.
He said the drought experienced in the past season will not affect the industry’s anticipated current year performance including the Mkwasine area farmed by private farmers, where water rationalisation plans were implemented at industry level.
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