Hippo Valley Estates has reported a net profit of $9 million for the six months to September, matching its performance for the 2013/2014 year after sales volumes in both the domestic and export markets despite falling prices which could hit revenues in future.
The profit after tax was a 54.8 percent increase on the same period last year, although contributions from associate companies fell to $441 000 from $710 000. Net profit for the full year to March was $9.015 million.
Operating profit at $15.2 million was higher than the $11 million achieved last year.
Revenue was up 28 percent to $85.5 million compared to $64.6 million in 2013 and the company lowered its debt from $54.3 million in the prior year to $38.4 million this year.
Hippo local and export volumes grew 57 percent to 133 486 tonnes against an industry average growth rate of 38 percent. In total, the industry sold 265 411 tonnes from 192 542 tonnes in the prior period.
“This positive achievement was due to an improved volume uptake in the local market, in response to the local market protection initiatives implemented in early 2014,” said Hippo chief executive Sydney Mtsambiwa .
Hippo’s assets stood at $404.443 million from $401.131 million in the prior period against liabilities of $106.135 million, down from $110.442 million.
To counter the effects of the lower prices, particularly on exports into the European Union (EU), Mtsambiwa said the company was on a drive to reduce the costs of sugar production.
“The drive to reduce costs of sugar production on a sustainable basis, which commenced in 2013/14 and which resulted in a 23% reduction in production costs per tonne in that year, has provided a good momentum for further reductions in costs, after consolidation in the current season,” he said.
At the end of the 2013/14 season, the company had 813 active indigenous farmers, farming more than 14 000 hectares, employing more than 6 700 people and who generated $58 million in annual revenue.
Hippo is 50.3 percent owned by South Africa’s Tongaat Hulett, which wholly owns the nearby Triangle Sugar Corporation. Its other shareholders are Old Mutual which holds 12.77 percent and Tate and Lyle Holland with 10 percent.
It has a 50 percent interest in Mkwasine Estate and Zimbabwe Sugar Sales and 49 percent of NCP Distillers. Its associate companies include Tokwane Consortium (32.56 percent) and Sugar Industries, a Botswana company (33.3 percent).- The Source