Hippo Valley Estates Limited delivered a strong performance for the year ended 31 March 2026, with profit surging on the back of higher sales volumes, improved operating efficiency, and a one-off benefit from prior-year carry-over stocks, despite mounting cost pressures across the sugar value chain.
The company reported revenue of US$220.8 million, up 15% from US$191.6 million in FY25. Operating profit more than quadrupled to US$33.6 million from US$7.7 million, while Adjusted EBITDA rose 131% to US$31.7 million. Profit for the year jumped 79% to US$24.1 million from US$13.4 million.
Total industry sugar production increased 1% to 443,501 tons, with Hippo Valley contributing 221,017 tons, also up 1%. The company maintained its share of industry sales at 49.80%, with total industry sugar sales rising 24% to 471,837 tons.
The volume growth was supported by both manufacturing and agricultural performance. The manufacturing unit achieved a 1% increase in sugar production to 221,017 tons, underpinned by minimal plant downtime, improved energy efficiencies, and use of bagasse to power the facility and export electricity to the national grid. The cane-to-sugar ratio improved slightly to 8.01 from 8.06, reflecting better cane quality and sucrose recovery.
Sales volumes were further boosted by the release of high carry-over sugar stocks accumulated in FY25, which provided a non-recurring lift to both volumes and cash generation during FY26.
On the agriculture side, total cane supplied to the mill rose 0.3% to 1.77 million tons. The mix, however, continued to shift toward private farmers. Private farmer deliveries grew 8% to 801,864 tons, continuing a multi-year trend, while company cane supply declined 5% to 969,186 tons. The decline was due to a 4% reduction in area harvested to 10,224 hectares and a 1% drop in yield per hectare, following the absence of plant cane harvested in the prior year.
The company replanted 1,324 hectares during the year, up from 793 hectares, and retooled haulage equipment to support future yields. Total area under cane rose 3% to 23,255 hectares.
The operating environment was marked by relative currency stability for the ZWG, supported by tight monetary policy. Consumer spending was firm, aided by improved household incomes from a strong tobacco season and higher returns in gold, platinum, silver and chrome. Liquidity in the economy improved, although the use of both ZWG and US$ persisted.
Input cost pressures remained a key challenge. Fuel prices rose sharply due to global oil supply disruptions linked to the Iran-Israel-US conflict, before government tax interventions provided some relief. The company also faced structural cost burdens, including a high wage bill in agriculture and elevated cane costs under the Cane Purchase Agreement and Cane Milling Agreement. The 77% Division of Proceeds to private farmers remained well above regional benchmarks of 56%-65%, with a pending court case seeking to raise it further to 80.5% retrospectively from April 2022.
VAT changes under SI 15 of 2024, and the Intermediated Money Transfer Tax, also added to the cost base.
The stronger trading performance translated into improved cash flows. The company ended the year in a net cash position of US$13.4 million, a US$22.3 million swing from net debt of US$8.9 million in FY25, following the full repayment of borrowings. Capital expenditure increased to US$7 million, including US$2.6 million on cane replanting, as the business reinvested in agriculture equipment and critical manufacturing requirements.
The company declared a dividend of 1.50 US cents per share, payable on or about 30 July 2026 to shareholders registered on 24 July 2026. In setting the dividend, the company considered the sustainability of cash flows, noting that FY26 benefited from non-recurring inventory release, as well as outstanding capital requirements and the pending DoP litigation.
Looking ahead, Hippo Valley remains focused on revenue enhancement, cost reduction and sustainable cash generation. Key initiatives include precision agriculture, drone and AI-driven data management, solar power for irrigation, and further mill efficiency projects. The company is also progressing Project Kilimanjaro to expand cane supply and improve utilisation of industry milling capacity, although it notes that expansion will only be pursued on terms that are economically viable given current cane pricing.
The company said the business maintains a cautiously optimistic outlook, supported by tentative macroeconomic stability, while remaining mindful of commodity price volatility, input cost pressures, water conveyance constraints, and the resolution of outstanding legal matters.
