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Economic hurdles weigh on Hippo Valley

Business
CONSUMER staples concern Hippo Valley Estates Limited

CONSUMER staples concern Hippo Valley Estates Limited, says it faced a myriad of headwinds in the year ended March 2024, which heavily impacted on the performance of the company,

In its 2024 annual report, the firm said these included 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 the eastern Europe, among others.

The company posted an operating loss of ZWL1,2 trillion driven primarily by a decline in revenue from the local market.

“..., the company’s performance was further worsened by unforeseen mill shutdowns, lower production yields, rising minimum wage and elevated input costs caused by price fluctuations and global inflation stemming from geopolitical conflicts on Eastern Europe,” Hippo said.

“Currency and inflationary dynamics continued to cause distortions in financial reporting. The company recorded a net monetary gain of ZWL2,6 trillion in contrast to the monetary loss of ZWL0,1 trillion for the year ended 2023.”

Hippo Valley said this was also was influenced by the indexing of the actuarial loss on the post-retirement medical aid obligation and retirement gratuity, which accounted for ZWL1,3 trillion, while the remaining balance was mainly due to the net indexing effect on other income statement related items.

During the period, Hippo Valley said exchange rate volatility and high inflation disrupted liquidity flows, creating cashflow gaps which were covered through utilisation of short-term loans, with the financial institutions struggling to satisfy working capital requirements due to general constraints experienced in the economy.

Hippo added that this challenge, largely experienced between June 2023 and March 2024, resulted in the company carrying long outstanding supplier obligations most of which were subsequently settled post March 31, 2024 after receipt of a significant portion of the export inflows

In the face of the El Niño weather phenomenon, a slow economic growth is projected across many business sectors which depend on water for irrigation.

The sugar industry has also faced significant challenges over the past year, primarily due to a decline in revenue from the local market, which typically yields higher returns than the export market.

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