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Hippo sugar output dives 1%, optimistic of regional export market expansion

ByEconomic Times

Feb 16, 2023

By ETimes

Hippo Valley Estates says its sugar production for the upcoming 2023/24 season will be marginally above levels achieved this season after suffering a drop in output for the nine months ended 31 December 2022.

Conversely, the sugar industry’s output was up 2% in the first nine months ending 31 December 2022.

Total cane milled by the company increased by 3% during the period under review. However, one of the company’s two production lines malfunctioned in November 2022, forcing an early shutdown of the line for the remainder of the season.

As a result, 27,001 tonnes of cane had to be diverted to the Triangle sugar mill for crushing.

Despite an overall increase in cane supplies, the milling plants’ output of sugar somewhat decreased.

“This resulted from lower cane quality attributable to prolonged wetness arising from rains received at the onset of the season that had an adverse impact on cane quality,” the company said in a trading update.

“The wet weather in December 2022 also impacted the quality of cane harvested as significant rainfall was received during the month. Rainfall hinders both the harvesting and hauling of burnt cane to the mills resulting in the cane remaining in the fields for extended periods and leading to reduced sugar content.”

The firm expects the off-crop maintenance program, which started in December 2022, to be finished before the start of the 2023-24 season in April 2023.

“The focus of this annual maintenance is to minimise breakdowns and improve mill efficiencies during the crushing period,” it said.

For the period under review, the company had a 52.26% share of the 397 055 tonnes of sugar sold overall by the industry.

Industry sugar sales into the local market totaled 278 106 tonnes and were 3% less than the comparative period.

“The decline arose from increased competition from sugar imports after the government suspended import duty through SI98 on 16 basic commodities including sugar,” the company said.

“Revenue realisations on the local market, in both local and foreign currency, remained firm as most of our customers continued to support local brands against the imports that were available in the local market from May to December 2022.”

Export sales volumes increased by 27% to 40,246 tonnes.

“Efforts are underway to expand the regional export market base so as to reduce the market concentration risk,” it said.

After providing an update in the half-year results, the company is collaborating closely with the government to put the memorandum of understanding for how to advance the US$40 million Kilimanjaro Project as part of socioeconomic empowerment into action.

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There has not been much progress made on the land tenure issues during the quarter under review, according to the company.

In its outlook, the firm said both local and foreign currency funding arrangements with respected financial institutions will support any potential impact of liquidity and currency distortions on the company’s operating capital – Harare

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