ZIMBABWE – Sugar producer, Hippo Valley Estates Limited (Hippo), says its profit for the six months to September 30, 2015 slumped to $2,3 million from $9 million recorded prior period comparative on the back of challenging economic conditions.
In a statement accompanying the group’s financials for the period under review Hippo chief executive Sydney Mtsambiwa said the half-year results were attained in an environment characterised by difficult trading conditions and lower consumer spending.
“Operating profit and profit for the period amounted to $6 million (2014: $15,2 million) and $2,3 million (2014: $9 million), respectively.
The groups total revenue for the six months amounted to $70,2 million compared to $82,5 million a 15 percent slump.
This comes as Zimbabwe’s economy, which had grown by nearly double digit figures from 2009 to 2013, is expected to grow by 1,5 percent this year from an initial projection of 3,2 percent due to massive company closures and power shortages.
The country’s economy has failed to gain traction since the 2013 elections that was controversially won by one of Africa’s long-serving leaders President Robert Mugabe.
Since then deflation has taken root as consumer demand shrinks and the economy struggles with a shortage of dollars.
Once bustling factories in Harare are now rusty shells, devastated by the 1999-2008 recession that cut gross domestic product (GDP) by about half.
But Mtsambiwa noted that domestic market sales volume levels have been maintained despite the challenging environment.
“This was more than offset by lower export volumes, due to the timing of shipments between the first and second halves of the year, and lower export prices in the European Union,” he said.
Private farmers registered a four percent decrease in deliveries during the six months under review, collectively delivering 549 645 tonnes of cane compared to the 569 925 tonnes delivered prior corresponding period.
Hippo’s deliveries during the period under review increased four percent to 754 254 tonnes compared to 723 158 tonnes attributed to an early start to the milling season compared to prior season.
Total cane deliveries increased one percent to 1,3 million tonnes while sugar production for the year slumped six percent to 157 877 tonnes from 167 425 tonnes attributed to lower mill recovery ratios.
Operating cash flow before working capital for the period stood at $20,7 million from $25,7 million.
About $18,8 million was absorbed in working capital compared to $26,4 million absorbed prior period due to a lower stock-holding compared to previous year.
The sugar producer’s net debt for the six months decreased to $33,6 million from $38,4 million as interest charge for the six months stood at $3,4 million from $3,6 million.