Hippo Valley Estate Limited Records 22% Rise in Operating Profit

Leafias Mazviro

Zimbabwe Stock Exchange-listed firm, Hippo Valley Estate Limited, has registered an increased operating profit of 22% as sales increased from ZWL21.2 billion in 2022 to ZWL25.9 billion in 2023.

According to the firm’s Abridged Audited Financial Results for the year ended 31 March 2023, operating profit and profit for the year grew by 22% to ZWL25.9 billion (2022: ZWL21.2 billion) and by 24% to ZWL17.2 billion (2022: ZWL13.9 billion) respectively, with the majority of the growth attributable to changes in the value of biological assets.

However, the company’s inflation-adjusted revenue rose by 37% to ZWL1339.3 billion (2022: ZWL101.9 billion) on the back of price adjustments in response to increasing cost pressures, amplified by currency dynamics embedded in CPI indices.

The Company recorded a marginal decrease of 2% in Adjusted EBITDA to ZWL10.4 billion (2022: ZWL10.6 billion).

“Profit margins are measured using Adjusted EBITDA (to exclude any distortions from non-cash changes in the value of biological assets) and have declined from 10.4% in the prior year to 7.5% in 2023.

“This squeeze on margins arose from lower sugar production, significant increases in fertiliser and fuel costs, and the impact on manpower costs post the finalisation of the wage negotiations,” read the part of the report.

Net cash outflow from operating activities increased to ZWL3.4 billion from ZWL3.3 billion in 2022 on account of decreased EBITDA and increased working capital requirements.

“A total amount of ZWL3.4 billion was spent on capital expenditure (2022: ZWL2.9 billion) out of which ZWL1.8 billion (2022: ZWL1.1 billion) was for root replanting.”

As of 31 March 2023, the Company had a net borrowing position of ZWL4.4 billion compared to a net borrowing of ZWL1.1 billion in the prior year, with more cash being consumed due to an increased level of investing activities and foreign currency translation dynamics.

In addition, the company recorded a 1% decrease in the production of sugar as compared to the previous year same time. This season company has produced 207 430 tons which are lower as compared to 209 510 tons produced in 2022.

 

 

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