Drought affects Hippo Valley production


HARARE – Tongaat Hulett’s Zimbabwean unit, Hippo Valley (Hippo), says national sugar output is expected to decline to an average of 400 000 tonnes this year compared to 412 000 tonnes produced last year due to drought.

Zimbabwe is experiencing an El Nino-induced drought that has left over 5,5 million people in need of food aid.


Hippo company secretary Bigboy Shava said the drought has already resulted in his firm’s sugar production decreasing to 204 000 tonnes in the six months to March 2016 from 228 000 tonnes and 239 000 tonnes recorded in the 2015 and 2014 corresponding periods.

“The 11 percent volume decrease is largely attributable to a 15 percent reduction in cane deliveries from private farmers compensated by a three percent increase in deliveries by the company and a 6,4 percent drop in cane to sugar ratio as a consequence of reduced cane quality due to the unfavourable growing conditions,” he said.

Shava noted that a total of 1,6 million tonnes of cane was crushed during the season down from the 1,7 million crushed prior year, of this total, one million was company cane.

Meanwhile, group revenue for the year was down 20 percent to $116,8 million from $146,8 million prior year comparable.

Operating loss and net loss for the year amounted to $6,2 million and $8,5 million compared to operating profit and net profit of $16,2 million and $7,3 million achieved in the previous year, respectively.

“The disappointing results were a direct consequence of the significant reduction in sugar production volumes amounting to

24 000t from prior year due to the restricted irrigation and resultant drop in cane yields and the generally unfavourable local and international trading environment,” Shava said.

Hippo’s capacity utilisation also went down during the year under review to 64 percent from 71 percent.

“… this and the low price realisations on both the domestic and export markets, on account of liquidity challenges and global sugar market dynamics further negatively impacted the results for the year,” Shava added.

A $2 million fair value loss on cane was recorded for the year compared to a gain of $6,6 million in the previous year due to lower cane yields.

Net debt at $35 million was 13 percent higher than the prior year level of $31,1 million.

No dividend was declared in the interim period.


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