Harare – Hippo Valley Estates Limited total revenue for the six months ended September 30, 2018 increased by 29 percent to $93.2 million compared to $72.4 million the prior year underpinned by increased sugar production and competitive prices realisations.
The Company said sugar production increased by 13 169 tons more than the prior year, a 12 percent increase in domestic demand for sugar resulted in 205 809 tons sold compared to 184 191 tons in the comparative period.
“Sugar production for the period increased by 9 percent to 153 343 tons compared to 140 174 tons in 2017 on the back of improved Company yields averaging 115 tons per hectare compared to 82 tons canes per hectare in 2017, attributable to the improved availability of irrigation water and sustained focus on variety optimization and best farming practices.”
Hippo said the benefits of these positive factors were however partially negated by inflationary pressures fuelled by shortages of foreign currency and speculative pricing activities by suppliers of production inputs.
In the period under review, operating profits amounted to $15.9 million compared to $14.8 million prior year before accounting cane valuation charge of $5.8 million which the Company says is largely attributable to standing cane on some 1 716 hectares of Company cane fields currently occupied by third parties.
As a consequence operating profit and profit for the period amounted to $10.1 million and $7.0 million compared to $8.0 million and $5.6 million in 2017 respectively.
Operating cash flow before working capital amounted to $23.6 million compared to $23.8 million last year.
The Company said a total of $6.7 million was absorbed in working capital and deferred maintenance costs compared to $1.7 million the prior year arising from the increase in sugar stocks following the adoption of IFRS 15.
During the period under review, capex and root planting totalled $5.0 million compared to $10.5 million last year, of which only $2.3 million compared to $8.4 million in 2017 was for root planting due to reduced planted area.
Company posted a net cash position of $4.6 million compared to $204 000 in 2017.
Total cane deliveries to the mill increased by 11 percent to 1 204 957 tons compared to 1 082 640 tons in 2017 of which the Company’s own cane amounted to 733 036 tons compared to 575 482 tons last year, which is an increase of 27 percent, whilst private farmers collectively delivered 471 920 tons compared to 506 158 tons in 2017.
Hippo said the results were achieved in a challenging economic environment characterised by cost push inflationary pressures that negatively impacted performance.
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