Hippo recovery intensifies

Paul Nyakazeya

ZIMBABWE’S sugar production for the 2012/13 season is expected to increase to between 450 000 and 500 000 tonnes, from 372 000 tonnes achieved  last year, due to improved yields from the increased area replanted. Cane crushing from Chisumbanje is also expected to bolster volumes.
Hippo Valley Estate Limited revealed this when they announced their financial results for the year ended March 31, 2012.
The company said domestic market demand for sugar is expected to remain firm in the near future and that preferential markets for Zimbabwe’s sugar such as the European Union and the United States are expected to remain attractive in the year ahead.
“Realisations on the exports to the European Union remain sensitive to the Euro/US$ dollar exchange rate,” the company said.
“The restoration of the industry’s sugar production to installed milling capacity of around 640 000 tonnes per annum continues to be targeted objective.
“The ambitious four year recovery programme anchored on an accelerated plough out and replanting programme for private farmers has gathered momentum and is now moving into the second year,” said Hippo Valley.
The country’s macro-economic environment has remained relatively stable throughout the year despite the liquidity challenges that continue to prevail. The relatively stable economic environment continues to provide the necessary platform for the on-going recovery of the industry’s sugar production towards full capacity utilisation.
“The recovery of the Zimbabwe sugar industry continues to be underpinned by the accelerated private farmer sugar cane rehabilitation programme initiated in 2010 and 2011 under the Sustainable Rural Communities (SusCo) project,” the company said.
“A US$30 million four year revolving facility has been secured for this plough out and replanting programmes from a local institution,” said Hippo Valley.
Of the 15 880 hectares farmed by private growers across the industry, 3 476 hectares were re-planted under the SusCo project during the year under review, with a further 874 hectares being re-planted for the Chipiwa farmers financed from the EU-funded Canelands Trust.
The private farmers independently ploughed out and replanted 1 914 hectares during the same period, with input support from Tongaat Hulett.
This brings the total area replanted over the past two seasons to 6 502 hectares (41 percent of the total area in private farmer hands).
Collectively, private farmers delivered 531 990 tonnes of cane in 2011/12 compared to the 413 000 tonnes delivered in 2010/11 an increase of 29 percent.
Hippo Valley’s revenue for the year under review amounted to US$128,9 million from US$88,4 million last year. The 46 percent increase in revenue on raw sugar exports to the European Union.
“Operating profit and headline earnings amounted to US$322,4 million and US$20,9 million from USS$12,2 million and US$8,8 million respectively. Earnings per share amounted to 10,9 UScents from 4,6 UScents. The current year effective tax rate at 24,8 percent is close to the normal tax rate of 25,75 percent,” the company said.
The industry’s domestic market sales for the year under review totaled 247 000 tonnes compared to 184 000 tonnes last year. Domestic sugar prices were in line with prices prevailing elsewhere in the region.
Demand for sugar in the domestic market remained firm throughout the year.
A total of 125 000 tonnes of raw sugar was exported to the European Union under preferential market arrangements at favourable prices.