Business Reporter—
HIPPO Valley Estates estimates an increase in sugar industry production to rise to between 430 000 and 444 000 tonnes in the 2016 /17 season from 412 000 tonnes achieved last year.The weather forecast for the coming summer in the key growing and catchment areas is for average to above average rainfall.
The Zimbabwe Stock Exchange listed concern said the 2017/18 crop will nevertheless be impacted by the current reduced irrigation regime.
“Given the recent start to the current rainfall season and a recovery of key dam levels, total industry sugar production is expected to recover over two years, amounting to between some 385 000 and 413 000 tonnes in 2017 /18 and increasing to between some 535 000 and 570 000 tonnes in 2018/ 19. If the drought continues over the next summer in the catchment areas of the key dams then it could lead to a reduction in sugar production in 2017/ 18 of up to 150 000 tonnes compared to 2016 /17,” chairman Murray Munro said in a statement accompanying the results.
The sugarcane producer recorded an 18 percent growth in revenue to $82,9 million in the six months to September 30 compared to $70,2 million recorded in the comparative period last year. Profit for the period under review declined to $1,4 million compared to $2,1 million in the same period last year.
“This reduction (in profits) was caused by a higher proportion of exports, at prices below local market prices, and a higher level of outgrower cane payments compared with the first half of last year,” he said.
Looking forward, Mr Munro said the company’s profits for the full 2016 /17 year will continue to be influenced by a number of substantial and varying dynamics, both positive and negative, among which could include the introduction of the bond notes and the 5 percent export incentive, the full impact of which is difficult to predict at this stage.
“The proportion of earnings in the second half of the year is expected to be better than the second half of last year,” said Mr Munro.
He said the division of proceeds ration between outgrowers and the miller is out of line with ratios applicable in the region, as it does not take cognisance of the substantial capital employed in milling operations and is therefore not sustainable.
“Efforts to redress the situation continue,” according to Mr Munro.
Sugar production for the period to September 30 amounted at 155 522 tonnes, was a marginal 1 percent down on the same period last year at 157 877 tonnes which the company viewed as a “satisfactory outcome” considering the late start of the milling season and the resultant lower cane deliveries to the mill over the six month period to September 30 amounting to 1 165 432 tonnes compared to 1 303 899 tonnes delivered in the same period last year, a decrease of 11 percent.
Hippo Valley expects to continue benefiting from Government’s import restriction measures and from improved export revenues.