Ariston posts $33bn loss
Zimbabwe Stock Exchange (ZSE) listed agricultural concern Ariston Holdings Limited swung into a $33 billion loss for the year to September 30, 2023, from a profit of $5,9 billion in the previous year.
The group said the loss was mainly driven by unrealised exchange losses arising from liabilities denominated in US dollars.
According to the group, a significant change in reporting standards saw the group present its cost of sales before considering fair value changes related to biological assets, resulting in a reported gross loss due to a decline in fair value realised from biological assets.
Despite challenges in the market, the company reported a 15 percent increase in revenue to $35,479 billion compared to the prior year. This growth was attributed to a rise in tea prices driven by improvements in quality, offsetting the decline in macadamia nut prices.
Joint ventures played a pivotal role in contributing positively to the group, with a 169 percent increase in the share of profits for the year. However, inflation-adjusted interest expenses surged by 99 percent to $3,2 billion, primarily due to increased borrowings during the reporting period.
A revaluation of the group’s assets, including buildings, leasehold improvements, plant, and machinery, resulted in a revaluation surplus of $26,5 billion as of September 30, 2023.
The operational landscape for Ariston’s tea segment underwent a strategic shift as the company consolidated tea processing for two of its three estates into one factory.
“The equipment in this factory was upgraded to ensure capacity for the Greenleaf from both Estates and to improve quality and quantity of top export grades,” said chairman Mr Alexander Jongwe.
This decision, coupled with the commissioning of a solar generating plant, was aimed at improving processing efficiency and mitigating power outages.“This resulted in savings as envisaged, but the savings will be more apparent in future years,” he said.
Tea volumes experienced a 34 percent decline, largely due to the pruning of low-yielding gardens.
However, a focus on quality led to a 68 percent increase in the average selling price. Macadamia production volumes rose by 23 percent, but oversupply challenges persisted, causing a 40 percent decline in the average selling price. The “Other Products” category, including potatoes, commercial maize, seed maize, soya beans, and bananas, contributed 19 percent to the Group’s turnover, showcasing the importance of product diversification.
A notable investment during the reporting period was the installation of a solar plant at Southdown Estate, Chipinge, aligned with Ariston’s strategy of environmental sustainability. This 1,2-megawatt plant, integrated into ZETDC with net metering, not only brings financial savings but also aligns with the company’s commitment to renewable energy sources.
While the 2023/2024 agricultural season is expected to have lower than normal rainfall, Ariston has put in place measures to cushion its operations against bad weather.
“The group will have to rely heavily on its irrigation systems in mitigation. Dryland activities will be kept at a minimum. It is hoped that the extremely hot conditions will not persist for the duration of the entire season,” said Mr Jongwe.-herald
