Published: 04 July 2025

Hippo Valley Estates Limited is set to slash more jobs before the end of the 2026 financial year as part of a wide-ranging cost reduction initiative dubbed "Project Zambuko."

The move comes as the sugar manufacturer battles falling revenue and shrinking profit margins, with company executives saying workforce rationalisation is critical to restoring financial sustainability.

In a joint statement accompanying its financial results for the year ended March 31, 2025, Hippo Valley chairman Canaan Dube and chief executive officer Tendai Masawi confirmed that job cuts had already begun under the labour rationalisation plan.

"In response to continued cost pressure, the company launched Project Zambuko, a margin improvement initiative focused on cost containment and revenue optimisation," the executives said.

"As part of this, and in line with applicable labour legislation, an employee rationalisation process is underway to align labour costs with operational requirements."

The company, a key player in Zimbabwe's sugar sector, posted a sharp drop in revenue to US$191.59 million, down from US$340.47 million the previous year. Profit after tax plunged nearly 45% to US$13.44 million, prompting urgent internal reviews of operating costs.

Hippo's agriculture division – which accounts for around 72% of its full-time workforce (4,772 out of 6,628 employees) – is bearing the brunt of the cost-cutting efforts. Executives say the bulk of the company's wage bill is concentrated in this segment.

The first phase of retrenchments began in February 2025, and a second round is scheduled for implementation in the 2026 financial year.

One of the biggest cost pressures cited by the company is the revised wage structure. Hippo is currently paying a minimum wage of US$280 per month, with US$224 of that in foreign currency – a figure significantly higher than what private cane farmers pay, which is reportedly US$130 per month, with US$125 paid in forex.

"This differential continues to place pressure on the company's cost base and operating margins," the joint statement read.

"The current minimum wage structure has placed the company at a significant disadvantage relative to other sectors within the agriculture industry. This continues to erode profit margins below generally acceptable levels when compared with other agricultural operations, including other sugar-producing companies."

The company also flagged macroeconomic headwinds, including currency volatility, as exacerbating the cost of inputs and wages.

Project Zambuko is one of several strategic responses being rolled out as Hippo Valley attempts to maintain viability in an increasingly challenging business environment. However, the looming job cuts are likely to fuel concerns in the lowveld region, where sugar production is a vital source of employment and economic activity.

The company has pledged to follow due labour processes and comply with local laws as it proceeds with the workforce restructuring.

As the sugar industry faces mounting pressures – from pricing issues to stiff competition and rising operational costs – Hippo Valley's retrenchment programme signals a tough road ahead for the sector and its thousands of employees.
- The Independent

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