Currency conundrum threatens Hippo Valley operations

CLOUDINE MATOLA

Hippo Valley Estates Limited, a listed sugar producer, is struggling to deal with escalating issues, particularly with regard to currency discrepancy, which  are endangering the company’s viability, Business Times can report.

According to the company, the problem is that although revenue in Zimbabwe Gold (ZWG) is increasing, it is really decreasing in US dollars terms.

Exacerbating the situation is that the providers of goods and services want to be paid in US dollars.  However, the company’s US dollar revenues are insufficient to cover its hard currency expenses.

“Currency dynamics have had a negative effect on the cost of doing business as the company is currently experiencing a mismatch between the ZWG and US dollars on revenues and expenditure where the currency mix on revenues is currently showing a decrease in US dollars  denominated sales and an increase in ZWG denominated sales while providers of goods and services are currently preferring settlement more in US dollars than what the company is able to generate from the normal sales,” the company said.

Revenue for the quarter increased by 15% on the back of better sales mix and price realised despite the drop in overall sales volumes.

In addition, the growth in revenue was insufficient to offset the increase in the cost of doing business particularly in respect of manpower and cane costs.

Area under cane for the company grew by 1% to 10 768 for the period under review from 10 706 recorded prior comparative period.

While, the area under cane by private farmers increased by 2% to 12 288 as at June 30 from 12 101 recorded in 2023 same period.

The total area under cane also grew by 1% to 23 056 for the period under review from 22 802 recorded prior comparative period.

Sugar cane yield for the company grew by 3% to 106.6 tons recorded during the period under review from 103.9 tons recorded the same period last year. While the sugar cane yield by private farmers grew by 1% to 79.0 tons as at 30 June 2024 from 78.0 ton recorded in the same period in 2023.

Also, sugar cane production for the company grew by 3% to 297 902 tons as at June 30 2024 from 288 923 tons recorded prior comparative period. While sugar cane produced by private farmers grew by 18% to 221 184 tons as at June 30 2024 from 186 806 tons recorded in the same period last year.

The total sugar cane production for the period under review grew by 9% to 519 086 tons from 475 729 tons recorded in the same period last year.

The company’s sugar production for the quarter grew by 6% to 61 069 tons from 57 427 ton recorded in 2023.

Also, private farmers’ sugar production for the quarter grew by 10% to 124 059 from 113 171 recorded in 20023.

The company said they have adequate sugar stocks that will meet all the demands for the year.

“The company assures adequate sugar stocks for the year including meeting all critical sugar sales requirements before the commencement of the next season, to cover the domestic market first and then critical export market demands,” the company said.