REVENUES at the Zimbabwe Stock Exchange-listed Tobacco Sales Limited (TSL) increased by 229% to ZWL$66,8 billion in the third quarter of its financial year.

According to the firm’s trading update for the quarter, profitability continued to grow, driven by strong volume growth in the tobacco-related businesses, improved operating efficiencies and increased capacity utilisation.

“Group revenue for the quarter at ZWL$66,8 billion was 229% ahead of the prior year of ZWL$20,3 billion in inflation adjusted terms driven by strong volume growth, particularly in the tobacco-related businesses,” the group said.

“US$ portion of revenue for the quarter grew by 47% when compared to prior year. Group borrowings are foreign currency-denominated and remain low with adequate interest cover. The group continued to generate positive operating cash cows and has re-invested in the expansion of operations and payment of dividends to shareholders.”

During the period, TSL cumulatively handled 51,9 million kilogrammes of tobacco, a 125% increase on prior year’s figures.

TSL said the strategy to serve the much larger contracted tobacco market was yielding results, with 75% of the total volumes handled coming from this segment.

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The group attributed the positive results to a larger national tobacco crop, successful decentralisation of operations and the acquisition of new customers.

Propak hessian volumes were 17% ahead of prior year owing to stock availability and a larger tobacco crop size while tobacco paper volumes were 90% ahead of prior year as the market has continued to respond positively to the locally-coated paper.

“Agricura’s performance for the quarter was mixed. While some product lines performed better than the previous year on the back of product availability and competitive pricing, other product lines were lower than budget due to depressed demand,” TSL said.

In the farming operations, better yields were achieved compared to the previous year on tobacco, soyabean and commercial maize, with the new banana plantation, which started production in the year, improving volumes.

“The new business model, which supports the customer throughout the value chain, resulted in an increase in volumes across the logistics’ divisions. Tobacco handling volumes were significantly ahead of the prior year due to an increase in the customer base.

“The rail service from both Maputo and Beira has continued to operate and performance in the quarter was satisfactory. Clearing and forwarding volumes remained strong due to improved volumes from customers.

“General cargo handling volumes were buoyed by product movements to Zambia via the Beira corridor. Demand in the FMCG (fast-moving consumer goods) division was depressed as the formal retail sector struggled against the informal market as a result of the afore-mentioned pressures in the operating environment,” TSL added.

The group said it would continue to pursue key strategic initiatives in line with its “moving agriculture” strategy while protectively managing the prevailing challenges to ensure shareholder value is continuously created and preserved.