Enacy Mapakame Business Reporter
Depressed production volumes saw Hippo Valley Estates, a local unit of South African sugar producer Tongaat Hulett, report a 13 percent decline in revenue to $72 million for the half year ended 30, 2017 from $82,9 recorded in the same period last year. Profit for the year was however 300 percent firmer at $5,6 million from $1,4 million achieved in the prior year comparable period.
Sugar production during the period under review fell 10 percent to 140 174 tonnes from 155 522 tonnes during the comparable period last year.
Hippo attributed the decline to a late start of the milling season coupled with the resultant lower cane deliveries to the mill during the half year under review to 1 081 640 tonnes, which was 7 percent lower than last year’s 1 165 432 tonnes.
Total industry sales volumes for the half year under review was 15 percent lower to 218 896 tonnes from 257 356 tonnes.
“The overall volume of cane deliveries to the mill has been negatively impacted by lower cane yields due to the poor growing conditions precipitated by the restricted irrigation water availability due to lower dam levels prior to the onset of the rains in December 2016,” said chief executive officer Sydney Mtsambiwa in a statement accompanying financial results.
Hippo’s cane deliveries were 13 percent lower to 575 482 tonnes from 663 949 tonnes. Of this, private farmers collectively delivered 506 158 tonnes of cane, a marginal increase from 501 483 tonnes delivered in 2016.
While rainfall is anticipated to be normal to above normal this year, sugar production is still expected to be lower than last year due to the impact of low dam levels in 2016 and restricted irrigation in the key growing period for the season’s crop.
The sugar manufacturer’s operating profit for the period jumped 105 percent to $8 million from the $3,9 million achieved for the same period last year, largely on account of an improved mix resulting from increased local sugar sales volumes relative to exports.
“The domestic market remains a key focus area. Operational optimisation at the Triangle refinery has increased production of refined sugar suitable for domestic industrial markets.
“Growth is expected in consumption per capita, of a low base of some 23 kg/capita in the country, supported by distribution, industrialisation and marketing initiatives towards a regional average of around 30 kg per capita,” said Mr Mtsambiwa.
Operating cash flow before working capital changes for the half year under review amounted to $23,8 million from $23,1 million.
A total of US$1,7 million was absorbed in working capital and deferred maintenance costs compared to a release of $3,6 million in the comparative period, mainly due to a higher stock-holding and debtors book in the current period compared to the previous period.