Hippo Valley remains optimistic despite Q1 2020 output declines

  • Company’s cane output down by 12%
  • Firm sugar demand in local market was achieved
  • Local industry sugar sales rose by 11% in the quarter

Harare- Sugar producer, Hippo Valley Estates Limited’s cane and sugar production continues to contract as seen by the declines registered in the quarter ended 30 June 2020 (Q1 2020) but the Company expects a rebound in the 2020/2021 financial year.

In the period under review, the Company harvested a total of 275 293 tons of cane, a 12% decline from 311 923 tons harvested in the prior comparative period while output from private farmers declined by 6% from 148 015 tons in Q1 2019 to 139 297 tons in the period under review.

Sugar production in the quarter decreased by 8% from 53 997 tons in the same period last year to 49 425 tons.

The Company stated that although the 2020/2021 production season started on schedule, cane deliveries to the mill were constrained in the initial weeks mainly due to logistical challenges by NRZ which compromised the overall harvesting programme.

Mill performance for the quarter was however said to be satisfactory with all the efficiency parameters being within the long-term averages for this time of the season.

Sugar demand in the domestic market remained relatively firm in the quarter as consumers stocked up ahead of winter and as a precaution in light of COVID-19.

Total local industry sales volumes increased by 11% to 66 492 tons compared to 60 054 tons sold in the prior period last year.

Export sales to date of 32 080 tons were achieved during the quarter compared to 14 587 tons over the same period last year, driven by increased sales into Kenya.

A season total of 136 000 tons has been allocated to the export market of which 58% has already been allocated with 97 500 tons expected to be exported to Kenya and 18 198 tons to the United States.

On the outlook, the Company maintains its positive outlook for the 2020/2021 financial year with sugar production being forecast to be between 445 000 tons and 455 000 tons from 441 000 tons achieved in the prior year.

 The Company remains optimistic that in spite of the COVID-19 pandemic and the current economic challenges, the Zimbabwe sugar industry is well positioned to be one of the most competitive in the region by 2023, driven by increased production and operating efficiencies.

Hippo Valley is a subsidiary of the JSE-listed Tongaat Hulett Limited.

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