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Ariston revenue nosedives

The Zimbabwe Stock Exchange-listed firm saw its inflation adjusted revenue declining by 14% to $634,9 million after both local and export tea sales volumes suffered a 10% and 22% drop, respectively.

BY MTHANDAZO NYONI REVENUE at horticultural giant Ariston Holdings declined 14% for the half year ended March 31, 2022 compared to prior period due to a drop in tea sales volumes and non-inclusion of the fruit category in the group’s income.

The Zimbabwe Stock Exchange-listed firm saw its inflation adjusted revenue declining by 14% to $634,9 million after both local and export tea sales volumes suffered a 10% and 22% drop, respectively.

During the first quarter of the year, the group received proceeds from the disposal of 50% of its shareholding in Claremont Orchards Holdings Limited to Tuinbouw Zonder Grenzen BV (TZG). The transaction, inked with the Netherlands outfit, was worth US$2 million.

As a consequence of this transaction, the fruit category was not included in the group’s revenue for the current period.

“The widening of the exchange rate gap between the interbank auction rate at which the group’s export revenue was retained and the parallel exchange rate that suppliers are charging for locally purchased goods continued to put substantial pressure on costs due to mismatch in the two rates. This resulted in a 57% increase in cost of sales,” group chairman Alexander Crispen Jongwe said in a statement accompanying the group’s financial results.

Gross profit margin in the period under review also declined to 34% compared to 63% in the prior comparative period.

Loss from operations was 22% of revenue compared to a profit from operations at 19% of revenue in the prior comparative period.

The group posted an inflation adjusted profit after tax of $103 million, which is a 111% improvement on the prior period.

“This was after taking into account fair value adjustments, exchange differences, share of profit from investments in joint ventures and the monetary loss,” Jongwe said.

Inflation adjusted interest expenses declined by 1% to $21,5 million.

Production volumes at a tea segment had a marginal increase of 0,2% to 2,028 tonnes.

“There was a slow uptake of export teas in the first quarter of the year due to the effects of the COVID-19 pandemic on shipping logistics and costs. However, demand started improving in early March 2022,” he said.

Macadamia production volumes were 4% above the prior comparative period while export sales volumes were 47% ahead due to sale of some prior year macadamia stocks at the start of the current year. This resulted in the reflected sales volume increase compared to prior period.

Other products comprising potatoes, soyabeans, seed maize, commercial maize, seed sugar beans, avocado, bananas and poultry contributed 27% of revenue compared to 17% in the prior period, a sign that this category continues to grow and contribute positively to the group’s profitability.

Jongwe said indications were that the group will have higher yields than in the prior year, a softening in the export price of macadamia nuts but improvement in export tea price.

He said the continued effects of the COVID-19 pandemic on the global supply chain coupled with the effect of the war between Russia and Ukraine will have a negative impact on the speed and cost of logistics resulting in increased input costs, the group said.

“So far, the group has noted the significant increase in cost of fertiliser which is the group’s most significant single cost. The environment continues to be challenging but the Group believes that it is well positioned to continue improving its performance,” said Jongwe.

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