FILE: Tongaat Hulett in Zimbabwe Supplied 53

Harare - Earnings a share in Hippo Valley Estate, the Zimbabwe-listed operating unit of South African agri-processing group Tongaat Hulett, have dropped by 2.3 cents to 4.7c in line with a significant decline in revenues and operating profits.

Tongaat Hulett also owns a controlling interest in Triangle Sugar Corporation.

A week ago, the two operating units battled invaders who had occupied the group’s estates in Zimbabwe.

Hippo Valley and Triangle Sugar communications manager Adelaide Chikunguru had not yet responded to requests for an update on the situation, although workers at the company told Business Report on Wednesday that the situation had normalised.

Peter Staude, the chief executive of Tongaat Hulett, said early last week that the situation had been resolved with the assistance of the authorities.

Hippo Valley said on Thursday that it was not declaring a dividend for the year to March.

This was as a result of revenue sliding 22 percent to $136.1 million (R1.4 billion) and net profit declining from $13.6m last year to $9m this year.

“As a consequence of the decrease in profit after tax, earnings per share dropped to 4.7c from 7c,” the company said.

As a result, Hippo Valley did not declare a dividend.

Zimbabwe is battling mounting economic woes that have taken a toll on company profitability prospects.

Experts said on Thursday that urgent reforms were needed to spur economic stabilisation and restore confidence in the operating environment.

“Things are worsening and the government should take measures, such as restoring certainty and opening up for investments.

“We have seen companies such as Econet Wireless, Delta Corporation and now even Hippo – a producer of a basic commodity such as sugar, showing signs of weakening,” a fund manager attending an investment conference in Harare said.

The decline in Hippo Valley’s profits and revenue position is in spite of its sugar production rising 5 percent to 239 000 tons, which saw slightly below 200 000 tons of cane being crushed.

The company said its performance for the year had been “negatively impacted upon by substantially increased imports in the market and as a result [of] additional exports” which came at lower prices.

However, Staude said on Monday that competition from cheap imports in its two largest markets – Zimbabwe and South Africa – had declined in the past three months.

The company’s falling profitability from the sugar operations was contained by improved profitability in its starch business unit, leading to an overall 11 percent rise in operating profit of R2.37bn.

Zimbabwe’s sugar industry has largely been affected by the increasing import volumes of cheaper sugar.

The overall sales volumes for it on the domestic market declined 43 percent to 148 000 tons.

“A combination of declining consumer disposable income and the influx of cheap imported sugar… militated against… efforts to maximise sales volumes,” Hippo Valley said.