In exclusive interview a stockbroker from Imara Edwards Securities said for the 2010/2011 season Hippo Valley Estates, on its own, would produce between 125 000 and 135 000 tonnes. Capacity utilisation would rise to around 42 percent from 29 percent for 2009.
"Further growth is expected in the 2011/2012 season to between 380 000 tonnes and 400 000 tonnes for the industry as a whole, and between 165 000 tonnes and 175 000 tonnes for Hippo Valley," he said.
Following refurbishments, the Hippo mill is now crushing 400 tonnes of cane per hour.
"We expect sugar recoveries to go beyond 90 percent," the stockbroker said.
Revenues at Hippo last year grew 6 percent to $39 million, albeit on lower sales volumes.
"The company's net debt at the end of September 2010, was $33,2 million, mainly as a result of refurbishment work on the mill and the company investing in the replanting and re-establishment of cane crops. Increased working capital levels are reflected in the strained current ratio which weakened in the interim period."
Meanwhile, the European Union's Sugar Association Funding Scheme remains critical to unlocking the full potential of the 16 000 hectare of out-grower cane land, the stockbroker said.
A further allocation of Euro3,8 million for the out-grower rehabilitation programme at Hippo Valley Estates was recently made, although the project is still subject to conditions on land tenure issues being met.
The conversion to flood irrigation and replanting of the 1 200 hectare Chipiwa Scheme is on course and should be in action soon.
The source said problems could arise due to the land scenario which "still remains a contentious issue in Zimbabwe especially within the sugar producing areas.
Post published in: Business