Hippo Valley Estates Limited has reported a strong turnaround in performance for the year ended 31 March 2026, moving from a net debt position to a net cash position of US$13.4 million and growing profit by 79% to US$24.1 million.
The sugar producer said the performance was anchored on revenue enhancement, cost management and sustainable cash generation despite a challenging operating environment.
The company cautioned users of its financial statements that comparative information is based on opening balances translated from hyperinflation-adjusted figures, following its adoption of the United States dollar as functional and presentation currency. It said while the comparatives provide a reasonable assessment between FY25 and FY26, they were derived from a hyperinflationary environment that may have carried economic distortions.
Hippo Valley said the year was characterised by stable exchange rates following tight monetary policy to support the ZWG currency, while consumer spending remained firm. This was boosted by improved performance in tobacco and mining, where gold, platinum, silver and chrome prices surged, improving liquidity.
However, fuel prices rose sharply due to global supply disruptions linked to the Iran-Israel-US conflict, prompting the government to reduce levies to cushion the impact.
On agriculture, the company reported that cane supply from its own plantations declined by 5% to 969,186 tons, due to a 4% drop in area harvested to 10,224 hectares and a 1% decline in yield. The reduction was partly because the prior year benefited from harvesting of first-time plant cane, which has higher yields.
In response, Hippo Valley replanted 1,324 hectares, up from 793 hectares in the prior year, and retooled its cane haulage fleet to support future yields. The company said it is transitioning to science-driven agriculture through drones, AI-powered data management, solar-powered irrigation and modern equipment.
Private farmers continued to increase their share of total cane supply, with deliveries up 8% to 801,864 tons. While positive for capacity utilisation, the company noted this increases exposure to fixed cane costs under the Cane Purchase Agreement at US$71 per ton, which is not fully covered by export realisations.
In manufacturing, sugar production rose 1% to 221,017 tons, with total industry production at 443,501 tons. The operation recorded minimal downtime, improved cane-to-sugar ratio at 8.01, and continued to leverage bagasse for sustainable power generation while exporting excess power to the national grid and reducing coal use.
The company flagged ongoing cost pressures, including a high wage bill in agriculture, costs under the Cane Purchase Agreement and the Cane Milling Agreement where the 77% Division of Proceeds in favour of farmers exceeds regional benchmarks of 56% to 65%. A court case that could increase the DoP to 80.5% with effect from April 2022 remains pending after judgement was reserved on 9 December 2025.
Sales and marketing delivered one of the strongest performances in recent years. Industry sugar sales volumes grew 24% to 471,837 tons. Local sales rose 12% to 379,319 tons, driven by strong retail demand for the Huletts and SunSweet brands, campaigns against smuggled and counterfeit products, and policy interventions that lifted local market share above 90%.
Export sales more than doubled, up 114% to 92,518 tons, despite rail wagon shortages and flooding in Mozambique that affected logistics. The company said some contracted export volumes were deferred to next year.
Financially, revenue growth was supported by higher volumes and deliberate prioritisation of the local market which offers better margins than exports. Adjusted EBITDA, which excludes biological asset movements, more than doubled to US$31.7 million from US$13.7 million.
Operating cash flows after interest, tax and working capital surged to US$29.7 million from US$8.7 million, largely from local sales recovery and monetisation of carry-over stocks from the prior year, a benefit management said will not recur at the same level in FY27.
Capital expenditure increased to US$7 million from US$4.8 million, including US$2.6 million for replanting, as the company invested in agricultural equipment and critical factory spares to reduce reliance on outsourced services. Improved cash flows enabled full repayment of borrowings.
The Board declared a dividend of 1.50 US cents per share payable on or about 30 July 2026 to shareholders registered by 24 July 2026, after considering future capital needs, contingent liabilities and sustainability of cash flows.
On Environment, Sustainability and Governance, the company recorded two Lost Time Injuries, down from three, with its Lost Time Injury Frequency Rate improving to 0.023. It maintained Occupational Health, Safety and Environmental Management Systems certification and continued its reforestation programme, provision of LPG to employees to discourage firewood use, and replacement of electricity-powered equipment with solar.
Looking ahead, Hippo Valley said it remains cautiously optimistic, with sufficient sugar stocks to meet near-term demand, water in major dams to cover at least three seasons despite a forecast El Niño-induced below-normal 2026-2027 rainfall season, and plans to reinvest in yield protection, power alternatives and plant maintenance under Project Zambuko.
It said engagement continues with government on land tenure, with 99-year lease applications now transitioning to title deeds, while Project Kilimanjaro and other cane expansion initiatives will only be pursued on commercially viable terms given the current cost-price squeeze in milling.
