Things are look­ing up for Ton­gaat’s op­er­a­tions in Zim

The Star Early Edition - - COMPANIES - Tawanda Karombo

EARN­INGS and vol­umes in Ton­gaat Hulett’s Zim­bab­wean listed unit, Hippo Val­ley, surged in the year to end March 2017, with op­er­at­ing profit dou­bling to $13.4 mil­lion (R171.88m) fol­low­ing an in­come surge that saw rev­enues rise from $117m to $148m.

Ton­gaat Hulett also has an in­ter­est in non-listed Tri­an­gle Sugar Cor­po­ra­tion, an­other sugar pro­ducer in Zim­babwe.

The South African agro pro­cess­ing firm’s units in Zim­babwe are ex­pect­ing fur­ther growth in the year to March 2018, fol­low­ing suf­fi­cient rains that have boosted prospects.

In the year to the end of March 2017, Hippo Val­ley saw prof­its for the year mount to $7.7m from a loss of $8.8m in the pre­vi­ous com­par­a­tive pe­riod.

Sugar pro­duc­tion surged to 229 000 tons against 204 000 tons the pre­vi­ous year.

“This is re­flec­tive of an im­prove­ment in both sugar pro­duc­tion and sales vol­umes and the cor­re­spond­ing in­crease in rev­enue,” the com­pany said yes­ter­day.

De­spite at­trib­ut­able prof­its for the pe­riod amount­ing to 4 cents per share com­pared to a loss of 4.6c per share in 2016, Hippo Val­ley did not de­clare a div­i­dend for the pe­riod.

It cited “cash re­quire­ments for crop re-sta­b­lish­ment” and high lev­els of bor­row­ings ex­pected for the greater part of the year” for the de­ci­sion not to de­clare a div­i­dend.

The com­pany closed the year with a net debt po­si­tion of about $7.9m against av­er­age in­ter­est rates on its bor­row­ings of about 7.5 per­cent.

About $4.4m in fi­nance costs has been in­curred dur­ing the year.

The im­proved earn­ings for the com­pany stem from ris­ing de­liv­er­ies from pri­vate farm­ers as well as im­proved cane yields dur­ing the pe­riod.

About 701 000 tons of sugar were de­liv­ered by the pri­vate farm­ers against 631 000 tons in the prior year pe­riod.

Re­plant­ing

“Cane plough out and re­plant­ing pro­grammes which had been sus­pended in Oc­to­ber 2015 due to low dam lev­els re­sumed in Fe­bru­ary 2017 af­ter the in­dus­try dams had gained suf­fi­cient ir­ri­ga­tion fol­low­ing good rain­fall re­ceived.

“A to­tal of 866 hectares have been re­planted as at March 31, 2017. There has been a 6.8 per­cent im­prove­ment in the caneto-sugar ra­tio,” Hippo Val­ley said.

The com­pany also ben­e­fited from de­clin­ing low priced im­ports of sugar prod­ucts af­ter the gov­ern­ment in­sti­tuted im­port re­stric­tions last year.

Hippo Val­ley sold as much as 301 000 tons of its sugar pro­duce on the do­mes­tic mar­ket and this rep­re­sented a 4 per­cent in­crease and also came against the back­drop of liq­uid­ity chal­lenges in the coun­try, ex­ec­u­tives said.

The ex­port mar­ket has also been lu­cra­tive for Hippo Val­ley, with Euro­pean and re­gional mar­kets see­ing a rise in both vol­umes and prices of about 20 per­cent.

“The favourable sales mix in the do­mes­tic mar­ket com­bined with the high prices re­alised on ex­port sales re­sulted in an av­er­age price for the sea­son of $578 per ton.

“The con­tin­ued in­ter­ven­tions by the gov­ern­ment to pro­tect the in­dus­try against un­fair com­pe­ti­tion from im­ports has con­tin­ued to yield pos­i­tive re­sults.”

PHOTO: SUP­PLIED

Ton­gaat Hulett op­er­a­tions in Zim­babwe have had a surge in profit in the year to the end of March.

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