Ariston posts 18% growth in revenue

Source: Ariston posts 18% growth in revenue –Newsday Zimbabwe

REVENUES at agro-industrial concern Ariston Holdings grew by 18% to $28,3 billion in inflation-adjusted terms in the third quarter ended June 30, 2023, despite the firm experiencing high costs of production.

Last year in the same period, income stood at $23,9 billion.

In a trading update, Ariston secretary Nkosilothando Ncube said operations continued to be affected by increasing costs of production for key production inputs such as fertilisers and crop chemicals, as well as incessant power outages resulting in increased fuel usage for generators.

“The fuel expense became so significant that the board made a decision to invest in a solar power-generating project, which was completed in July 2023,” he said.

“This will have the effect of underpinning uninterrupted production while at the same time reducing the cost of producing tea to sustainable levels. The full effect of this significant investment will be felt in the year ending September 30, 2024, and not in the current year’s performance.”

During the current year, Ncube said the group made the decision to drop 20% of the lowest yielding tea gardens where fertiliser application at the new increased price could not be justified.

At the same time, harvesting was changed to ensure better quality of greenleaf and finally, production equipment was also further enhanced to improve made-tea quality to increase export quantity.

This strategy resulted in tea production volumes reducing by 21% to 2 245 tonnes from 2 850 tonnes and export tea sales volumes improving to 1 343 tonnes from 897 tonnes in the prior comparative period.

Macadamia production volumes at the end of the quarter under review at 1 313 tonnes were 29% above prior comparative year’s production volume of 1 020 tonnes.

Ncube said poultry production volume was reduced in the current year as the out-grower model is being reviewed due to its unsustainable nature arising from the mismatch of revenues being in Zimdollar, while input costs are all in United States dollar and the local currency revenue being paid out at prices not enabling the out grower to settle the input creditors.

He said there was a significant improvement in the yields of commercial maize, seed maize, commercial soya beans, seed soya beans, potatoes and bananas.

Total tea sales volumes improved considerably when compared to the last two prior comparative periods.

Export tea sales volume improved to 1 343 tonnes, which made up 57% of total tea sales for the current period compared to 897 tonnes which represented 46% of total sales in the prior comparative period.

“This significant shift in the sales volume make up is attributed to improved tea quality coupled with improving logistics post the COVID-19 induced logistics bottleneck,” Ncube said.

“Logistics challenges have not yet recovered to the pre-COVID-19 pandemic period but there are some improvements. Average selling prices for both export tea sales and local tea sales remained firm during the period.”

Macadamia harvest started towards the end of March 2023 as that was when the nuts had reached maturity.

The harvesting season started late than prior year which also resulted in the selling season starting late.

Macadamia export sales volumes at 513 tonnes were 35% lower than the 785 tonnes sold in the prior comparative period.

“Export supply contracts are on hand with various customers for the majority of the tonnage produced to date, however shipping delays have been experienced which has resulted in slower movement of the macadamia nuts,” Ncube said.

Sales of poultry and other products were in line with production volumes, he noted.

“In addition, as stated above, a number of products had not yet been sold as at record date and were being held in stock awaiting dispatch,” Ncube said.

In the outlook, he said the group would continue to focus on cost containment measures and improving production processes and product quality.