SUGARCANE miller, Hippo Valley Estates Limited (Hippo) has recorded revenue growth of 24% after the government reinstated import duty on non-fortified imported sugar brands, it has been revealed.
In a statement accompanying the company’s financial statement for the half year ended September 30, 2024, Hippo chairperson Canaan Dube revealed that the repeal of Statutory Instrument 80 of 2023 on January 31, 2024 helped the sector to recover.
Prior to this, the sugar sector was eroded by 25% from imported sugar products.
“Following the repeal of Statutory Instrument 80 of 2023 on January 31, 2024, import duties were reinstated on low-cost, non-fortified imported sugar brands, which had resulted in an erosion of the local sugar industry’s market share by as much as 25%. 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,” Dube said.
“Twenty-four percent increase in revenue 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% volume decrease.”
The group’s profit after tax, however, dropped by nearly 29% to US$18,18 million during the period under review, from a 2023 comparative of US$25,61 million.
Hippo explained that this was due to price distortions caused by exchange rate and inflation dynamics in its adopting the US dollar as a reporting currency.
“The local market recovery was supported by the reimposition of duties 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 priorities,” Dube said.
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“Operating profit decreased by 56% to US$13,7 million (2023: US$31,1 million) resulting from pricing distortions in the movement of fair value of biological assets which arose from exchange rate and inflation dynamics embedded in the opening balance prior to it being converted to US$.”
Operating cash flows after interest, tax and working capital changes increased by US$4,4 million to US$16,8 million during the period from the 2023 comparative.
The positive impact came from improved working capital after Hippo successfully regained its local market share following the repeal of Statutory Instrument 80 of 2023.
Dube said the agriculture and manufacturing business operations recorded 12% and 8% growth in cane harvested from the company’s plantations and sugar production, respectively.
“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,” he said.
“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.”
He noted that there were adequate sugar stocks to satisfy demand locally and meet critical export market requirements.
Hippo had US$2,30 for every dollar of short-term debt at the end of the reporting period, leaving it in a liquid position as of September.
Total assets were recorded at US$187,52 million as of September, from US$169,14 million in March.
