Hippo Valley profit surges to $4 billion

HIPPO Valley Estates (Hippo Valley) recorded an inflation adjusted profit of $4,09 billion for the year to March 31, 2022, a 38 percent increase from $2,96 billion in the prior year driven by a “positive market and product mix”.
The sugar producer’s adjusted EBITDA declined by 49 percent to $3,1 billion from $6,1 billion, owing mainly to the currency dynamics embedded in the consumer price indices. The figure was also weighed down by raw material costs and currency dynamics.
“The increase in raw material costs was driven by global commodity price increments compounded by the conflict between Russia and Ukraine. The change in mix of cane supply emanating from increased deliveries from private farmers also contributed to increased operating costs, as private farmer associated costs are relatively high,” said the company in its financial results.
Operating profit improved by 29 percent to $6,2 billion from $4,8 billion.
Sugar production increased to 209 510 from 204 384, while total industry sugar sales declined by 10 percent to 394 000 from 440 000. During the year under review Hippo Valley’s market share increased by three percent to 53 percent from 50 percent.
Cane deliveries from the company’s plantations (miller-cum-planter) decreased by 14 percent to 897 334 tonnes from 1 043 774 tonnes the prior year.
“This was mainly due to lower yields that emanated from a combination of yellow sugarcane aphid infestations and water logging of soils induced by incessant rains received between December 2020 and March 2021 that adversely impacted crop development.”
“In addition to this, early start-up of the milling season in April 2021 resulted in crushing of younger cane occasioned by a strategic decision to reposition the milling season to maximise growing and milling efficiencies in future seasons,” said Hippo Valley.
The company said private farmer deliveries improved by 31 percent due to an increase in area harvested largely attributable to new developed area under the Kilimanjaro project and ‘carry-over’ cane from the previous season.
Overall, total cane milled was in line with prior year, as the drop in miller-cum-planter was offset by private-farmer deliveries.
Sugar produced by the company increased by three percent to 209 510 tonnes from 204 384 tonnes due to better cane quality and favourable mill efficiencies. The requisite off-crop maintenance work was satisfactorily carried out from December until start-up of the crushing season in May 20.
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