- Production decreased to 57 427 tons
- Sales volumes further decreased
- The Group bemoans free sugar imports on operations
Harare- Sugar producer, Hippo Valley Estates witnessed a 10.6% decrease in production to 57,427 during the first quarter ended 30 June 2023. This decline was attributed to delayed deliveries by farmers due to late finalisation of sugarcane supply contractual agreements with private farmers. this was the worst perfomance by the company since January 2021.
Despite this, the annual off-crop maintenance program was successfully completed before the start of the 2023/24 season, allowing for scheduled plant start-up in the first quarter.
“The low cane throughput in the first five weeks of the milling season negatively impacted milling time efficiencies,” said the Group in a trading update.
The low cane throughput experienced by Hippo Valley during the initial five weeks of the milling season is attributed to the delayed deliveries by farmers due to late finalization of sugarcane supply contractual agreements. This delay in cane procurement disrupted the planned schedule for processing and resulted in lower throughput during that period.
However, both cane quality and cane-to-sugar ratio exceeded targets, resulting in improved recovery efficiencies.
“In order to finish the season as planned, and avoid carry over of cane, a revised cane delivery plan is being worked out to optimise milling capacities with the Triangle Mill,” said the Group.
In terms of sales, Zimbabwe Sugar Sales (Private) Limited (ZSS), the marketing desk for industry-produced raw and Sun Sweet Brown Sugar, reported a 52.12% share of the total industry sugar sales volume of 91,239 tons for the three months ending June 30, 2023 compared to 54.50% in 2022. Domestic market sugar sales for the same period reached 87,816 tons, a 4% increase compared to the prior year, driven by strong demand from industrial customers.
Revenue realisation in both local and foreign currency remained stable on the local market, with customers continuing to support local brands during the first quarter despite a decline in volumes in the last weeks of June 2023 due to the impact of duty-free sugar imports.
Industry exports for the quarter amounted to 3,423 tons, lower than the previous year's 10,039 tons. This difference was attributed to carry-over export allocations in the prior year, while the bulk of export orders for the current year will be processed in the second and third quarters.
Inflation adjusted revenue of ZWL231.4 billion was realised from ZWL171.4 billion on the back of price adjustments in response to hyperinflationary pressures. Cost of doing business also responded to the cost push inflation.
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