ZIMBABWE – Hippo Valley Estates, Zimbabwe’s largest sugar producer, has reported a 7 percent decline in domestic sales for the first quarter ending June 2024.
The company attributes this drop to the lingering effects of duty-free sugar imports and a sluggish start from local sugar refineries.
According to Canaan Dube, Chairman of Hippo Valley Estates Ltd, the influx of sugar imports from regional countries and beyond, including fortified sugar, has put pressure on the local market.
“Domestic sales for the quarter dropped by seven percent in comparison to the prior period, with the spillover effects of duty-free sugar imports still noticeable during the period under review. Sales performance was also impacted by a slow start from the country’s sugar refineries, but this has since recovered,” Dube explained.
Despite the decline in domestic sales, Hippo Valley’s revenue for the quarter grew by 15 percent, driven by an improved sales mix and better price realizations.
However, this revenue growth was insufficient to counterbalance the rising costs of doing business, particularly in terms of manpower and cane expenses.
The introduction of Zimbabwe’s ZiG currency, intended to stabilize the economy, has further complicated the financial landscape for Hippo Valley.
The widening gap between the formal and parallel market exchange rates, which reached a premium of 74 percent by July, has made it increasingly challenging for the company to secure the necessary USD for critical imports and local supplies.
Despite the decline, Hippo Valley reported a 6 percent increase in sugar production, fueled by improved yields and increased harvesting targets.
The company’s sugarcane production rose by 3 percent, reaching 297,902 tonnes, supported by consistent cane delivery rates
Private farmers also played a significant role, contributing to an 18 percent rise in output, which led to a 9 percent increase in total sugar production, reaching 519,086 tonnes.
This resulted in a 10 percent boost in total industry sugar production, totaling 124,059 tonnes.
Looking ahead, Hippo Valley remains optimistic, leveraging its strong market position to advocate for policies that support local sugar production.
Hippo Valley forecasts a production range of 395,000 to 400,000 metric tons of sugar for FY25, with projected revenue reaching US$385 million, up from US$366 million in the previous year.
The company is also targeting a 4 percent increase in cane harvesting and private farmer deliveries in the 2024/25 season to enhance milling efficiencies and overall sugar production.
Liked this article? Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE
