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Cheap imports hit Hulett's Zim business

Harare - Cheap sugar imports and weak export prices saw Tongaat Hulett’s Zimbabwean unit Hippo Valley report reduced revenues and profits for the half-year ended 30 September 2013.

In a statement accompanying Hippo Valley’s results, chairperson Herbert Munro said the business had experienced severe pressure from significantly lower international sugar prices and from a surge in sugar imports into the Zimbabwean market, which significantly reduced sales volume.

“The price levels that the business is achieving for sales into the EU this season averaged 6 cents per pound lower than the levels in the last two years,” said Munro.

Munro said sales volumes amounted to 84 990 tons (2012: 117 532), a 27.7% reduction as a result of lower local market sales and timing difference on export shipments. 

Revenue for the period under review amounted to US$52m (2012: $90.7m), a 43% drop.

Operating profit and profit for the period totalled $11m (2012: 17.4m) and $5.8m (2012: $11.1m) respectively.

Commenting on the operating environment, Munro said the sugar industry in Zimbabwe is in a receptive engagement with government to restrict imports.

“Local market sales are being lost to imports as a result of the current low world price, leading to increased export volumes at lower prices,” said Munro.

Hippo is however expecting to produce between 226 000 and 235,000 tons this season, against 228 000 last season.

 - Fin24





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