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TSL steps up regional forays as volumes fall

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BY FIDELITY MHLANGA

ZIMBABWE Stock Exchange-listed agro-industrial outfit, Tobacco Sales Limited (TSL) on Friday said it had reignited a long-cherished ambition to scour the region and unlock fresh opportunities, as revenues, profits and volumes slowed during the year ended October 31, 2020.

The giant controls a string of top-end agricultural sector oriented brands in Zimbabwe.

These include Tobacco Sales Floor (TSL), one of the biggest golden leaf dealers, Agricura, Bak Logistics and TSL Properties.

Most of these firms saw volumes slip during the review period after being undermined by several factors, including a late start to the tobacco marketing season, where TSF derives the bulk of its business.

In a statement accompanying the financial statements, company secretary James Muchando did not disclose if the listed giant was pursuing Southern African Development Community (Sadc) destinations, or if the firm was combing through the continent.

But as the markets struggled to ride out a vexing economic crisis in January 2006, TSL announced it was targeting Sadc for off-shore investments.

Interestingly, Zimbabwe has relapsed to the same crisis it faced in 2006, with consumer spending power recently hammered by a deteriorating crisis that has been compounded by the deadly COVID-19 pandemic.

Muchando said twinned with the African strategy would be the roll out of a pilot project in collaboration with government towards the introduction of a commodities exchange for primary agricultural produce.

“The group is exploring opportunities to expand its operations locally and regionally; organically and through strategic acquisitions,” Muchando said.

“In the coming year, the group will also undertake a pilot project with its partners and government in the introduction of a commodities exchange for primary agricultural produce. This is expected to have a materially positive impact on the agricultural sector in the years to come,” he said.

He spoke as TSL’s inflation-adjusted revenue fell by 16% to $2,19 billion during the review period, from $2,59 billion for the comparable period in 2019.

Profit-after-tax plunged 46% to $378,38 million, from $ 709,19 million in 2019 as volumes across key units retreated, compounded by COVID-19-induced lockdowns.

Independent auction volumes at TSF declined by 69% to 6,69 million kg after authorities turned down an application for TSL to decentralise its tobacco auction business closer to the markets, as travel restrictions kicked in from April 2020.

Still, TSF held the largest market share in the sector, according to Muchando.

He said contracted volumes handled for tobacco merchants at 8,46 million kg, were 42% below 2019 levels, while volumes at Propak Hessian fell by 24% due to the decline in national tobacco crop and reduced volumes sold through the independent auction market.

Tobacco handling volumes at TSL’s logistics operations trailed prior year performance by 9% after being affected by the late start to the selling season and delays in tobacco processing.

“Handling volumes at Premier Forklifts were 23% below prior year due to the delayed start of tobacco processing. Meanwhile, forklift sales were also depressed as most customers held back on capital projects under lockdown,” he noted.

“Tobacco yields were satisfactory, with pricing marginally below prior year. The lower-than-expected rainfall resulted in rationing of water and consequently the yields on the banana plantation were reduced and the winter wheat programme scaled back. The real estate division witnessed rental yields enhanced to 7,8% from 5% in prior year. Voids increased to 12% due to the lower tobacco crop. Construction of a10 000-square metre world-class warehouse is progressing well, although delays have been encountered in the steel supply chain. The warehouse is scheduled for completion and occupation in April 2021. The distribution division recorded significant growth in volumes as new customers were secured. Volumes in the ports business decreased by 51% due to generally slower movement of both imports and exports owing to the COVID-19 pandemic,” said Muchando.

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