Hippo Valley Estates recorded revenue of US$51.8 million for the first quarter ended June 30, 2026, remaining broadly in line with the same period last year despite a difficult start to the 2026/27 sugar season.

The sugar producer said cane deliveries declined by 25%, primarily due to disruptions caused by rains at the start of the crushing season, which reduced field accessibility and affected the planned harvesting programme.

In a trading update, Hippo Valley said sugar production fell by 21% from the prior year, reflecting the late start, periods of plant downtime, and reduced throughput.

“Despite the slow start, management remains confident that cane deliveries will recover without further disruptions. This confidence is supported by a robust cane supply system, capable of meeting peak harvesting demands and improved factory reliability,” Hippo Valley said.

Despite these setbacks, the company managed to maintain revenue, helped largely by firm demand in the domestic market. Local sales increased by 8% during the quarter and accounted for about 93% of total sales volumes.

Hippo Valley said its domestic performance was supported by commercial initiatives, customer engagement programmes and promotional activities. The Huletts SunSweet brand also continued to perform well.

The local market performance remains important to the company because domestic sales generally provide better returns than exports.

However, the business continues to face competition from imported, down-packed and counterfeit sugar, while weaker consumer spending in some parts of the retail market is also proving challenging.

The export market was less encouraging, with volumes falling below expectations. Hippo Valley attributed part of the decline to trade restrictions that affected sugar volumes previously destined for Kenya.

At the same time, the sugar producer is dealing with rising operating costs. Fuel, fertiliser, labour and cane procurement costs remain among the major pressures on the business, while disruptions to global supply chains and geopolitical tensions have added to uncertainty.

Management said it is responding by tightening expenditure, improving productivity and focusing on operational efficiency in an effort to contain costs and protect margins.

The company is also keeping a close watch on several risks, including supply-chain constraints, illegal water abstractions and the ongoing legal matter concerning the increase in the Division of Proceeds allocation.

On the water front, conditions are currently favourable. Dam levels were reported at between 95% and 100%, giving the company adequate irrigation water for at least the next two seasons.

However, weather remains a concern as the company prepares for the rest of the 2026/27 season. Hippo Valley said forecasts of El Niño-related conditions could bring below-average rainfall and higher temperatures, potentially affecting agricultural output.

The company said it will continue monitoring weather developments and take steps to protect its operations against possible disruptions.

On the outlook, Hippo Valley said its performance is expected to reach optimal capacity with all available cane for crushing converted into sugar, supported by reliable plant operations, improved operational efficiencies, and ongoing cost management initiatives.

“Although the crushing season commenced later than planned, the company remains focused on sustaining strong operational performance, building on the success of recent seasons,” the group said.

It added that it will continue to monitor market developments closely and implement appropriate sourcing and cost-control measures, including initiatives under Project Zambuko, to help mitigate these risks and maintain operational resilience.

Hippo Valley highlighted that it continues to monitor weather conditions closely given forecasts of El Niño-related weather patterns, which may result in below-average rainfall and higher temperatures.

The group said its longer-term focus remains on strengthening the resilience of its operations, improving productivity and maintaining sustainable returns while continuing to invest in environmental and community initiatives.