SUGARCANE miller, Hippo Valley Estates Limited, is expecting a 4% increase in the sugarcane harvested and delivered from private farmers in the 2024/25 agricultural season.
The increase is from the current 2023/24 period, which has been plagued by the El Niño-induced drought that is significantly lowering food security in Zimbabwe, but in Zambia and Malawi too.
“The company through its strategic focus to improve yields is looking forward to harvesting 945 471 tonnes cane and receive 739 329 tonnes cane from private farmers in the 2024/25 season, a 4% increase from the current year,” Hippo said in a statement attached to its financial results for the year ended March 31, 2024 released on Tuesday.
“Milling efficiencies are anticipated to recover on the back of improved cane quality and after the satisfactory completion of the requisite annual maintenance programme, with a forecast to produce 202 860 tonnes of sugar at a cane to sugar ratio of 8,26.”
Hippo said its major dams supplying sugar cane with irrigation were holding sufficient water.
“With low water levels at Manjirenji and Siya dams at 39,8% and 59,3%, respectively, as of 6 May 2024, the Zimbabwe National Water Authority plans to rationalise water supplies from these dams in order to mitigate impacts on the crop until such time the water stocks improve,” Hippo added.
In its financial year ended March 31, 2024, Hippo experienced lost revenue in the local market, which generates higher returns compared to the export market.
Revenue was ZWL$7,5 trillion at the end of the period, from ZWL$4,28 trillion in the comparative period.
- Hippo Valley to exhaust available borrowing facilities for capital
- Hippo prepares for sweeter cane harvest, deliveries
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However, the revenue increase was negated by a ZWL$3,46 trillion rise in the cost of sales.
Unscheduled mill stoppages, combined with the decline in yields, increase in the minimum wage, high input costs due to price volatility and global inflation from geopolitical events in Eastern Europe, all negatively impacted Hippo’s finances.
“Resultingly, an inflation-adjusted operating loss of ZWL$1,3 trillion (2023: operating profit of ZWL$0,8 trillion) was recorded for the year. Currency and inflationary dynamics continued to cause distortions in financial reporting. The company recorded a net monetary gain of ZWL$2,6 trillion (2023: monetary loss of ZWL$0,1 trillion),” Hippo said.
“The net monetary gain was significant enough to turn the operating loss for the year into an overall inflation-adjusted profit of ZWL$0,5 trillion [2023: ZWL$0,5 trillion].”
The company is reportedly engaging key stakeholders, promoting open and constructive engagements with farmers, trade unions, suppliers and customers to advance mutually beneficial relationships.
“Following the implementation of two cane supply agreements at the beginning of prior year [namely a sugar milling agreement and a cane purchase agreement], both agreements remain in use for the 2024/25 season and discussions of the current year’s cane purchase price have been concluded,” Hippo said.
“Management has put in place mechanisms that will allow smooth supply of critical goods and services from suppliers especially in light of improved cashflows from the recovering local market share, which provided the much-needed working capital post March 31, 2024 to enable accelerated settlement of overdue obligations with suppliers, thereby strengthening confidence in the supply chain.”
The firm had ZWL$2,30 to every Zimdollar of debt at the end of March, showing the firm was liquid enough to support its 2024/25 efforts.
“The company continues to pursue strategies that minimise risk to the business, create value and exploit opportunities that arise. A new year awaits with more opportunities to seize and complexities to navigate, while ensuring the core business operates sustainability,” Hippo said.
