HIPPO Valley Estates Ltd’s profit after tax plunged 35% to US$13,6 million in the full year to 31 March 2013, weighed down by an increase in finance costs.
Report by Gamma Mudarikiri
The company’s net debt grew to US$40 million up from US$33 million.
Resultantly, finance costs grew to US$6,8 million compared to US$6 million recorded in the same period the previous year.
Depreciation in property and plant equipment went up to US$12 million compared to US$7,3 million partly contributing to the plunge in profit after tax and consequently earnings per share.
“As a consequence of the decrease in profit after tax, earnings per share dropped to 7,1 US cents from 10,9 US cents achieved the prior year,” said the company in a statement accompanying financial results.
Despite the decline in after tax profit, revenue surged 35% to US$174,2 million buoyed by an increase in sugar production and the resultant increased sales volumes.
Sugar production improved 34% to 228 000 tonnes, while a total of 1,9 million tonnes of sugarcane was crushed during the period.
The company said recoveries improved to 84,75% compared to 83,4% in the previous year helped by mill refurbishment in the past season.
Domestic sales grew to 258 000 tonnes up from 247 000 tonnes last year, while a total of 202 000 tonnes were exported to the European Union under the preferential market arrangements.
The company said as part of the on-going measures to manage the available water in the dams supplying the industry, the cane re-establishment program was closely monitored in the period under review to ensure maximum irrigation water availability for season.
Going forward, the company is targeting to increase sugar production to installed milling capacity of 640 000 tonnes per annum.
Hippo Valley said it remained optimistic water mitigation measures put in place and the likely completion of Tokwe Mukosi dam this year would enable the industry to sustain the current levels of production.