Ariston aims to increase contribution of local crops

ARISTON Holdings says it has been focusing on increasing capacity utilisation and broadening the group’s product offering.

Ariston is an agricultural enterprise that produces a diverse range of farm products including tea, macadamia nuts, horticulture and deciduous fruits as well as fish, beef cattle and poultry.

The Deciduous fruits the company specialises in include bananas, apples and peaches;
while the staple crops it produces cut across potatoes, tomatoes, peas, maize and soya beans.

The group has a national footprint, with six strategic business units located in the northern and eastern regions of Zimbabwe.

Its Southdown Estates consists of three tea estates with over 1 200 hectares allocated to tea plants, almost 60 hectares to bananas and over 450 hectares to macadamia trees.

Claremont Estate concentrates on growing pome and stone fruit, passion fruit and potatoes, while Kent Estate focuses on horticultural crops, poultry and livestock.

Group chairman Alexander Jongwe in a statement of financials for the year ended September 30, 2021 said revenue increased to $1,2 billion from $938 million in the prior year driven by increased sales in the local market.

“The revenue reflects a growth of 31 percent when compared to prior year and this was mainly driven by increase in sales of products grown and consumed in the local market,” he said.

Mr Jongwe said current year gross margin was maintained at the same level as in the prior year of 55 percent.

However, profit from operations declined to 11 percent of revenue compared to 21 percent of revenue experienced in the prior year comparative period due to the impact of the miss-match arising from revenue from exports where RBZ retention at 40 percent is being paid at a rate significantly lower than that being charged by suppliers resulting in
erosion of value.

Mr Jongwe said in the year under review approximately 20 percent was lost from the revenue line as a result of the 40 percent RBZ retention.

“After taking into account fair value adjustments and the monetary loss, the Group realised an inflation adjusted loss before interest and tax of $244 million, compared to a profit of $112 million for the prior comparative period.

“Losses were made on fair value adjustments due to these being denominated in USD and the USD Interbank rate lagging behind inflation index,” he said.

He noted that inflation adjusted interest expense grew by 24 percent to $42 million driven by interest on local borrowings.

Overall the Group posted an inflation adjusted loss after tax of $19 million, compared to prior comparative period’s profit of $217 million.

In terms of volume performance, current year tea production volume improved by 6 percentdueto wetter and cooler weather conditions experienced during the period under review than during the same period in prior year.

Mr Jongwe said production volume recovered to 2 748 tonnes compared to 2 582 tonnes produced in the prior comparative period.

“Shortage of harvesting labour led to loss of approximately 300 tonnes of tea not being harvested in the current year.
“Changes have since been made to production processes so as to mechanise some of the processes thereby leaving labour for harvesting.”

He indicated that it is anticipated that labour shortage will persist for the foreseeable future in the areas where the group operates.

During the period under review, export tea volumes declined by 27 percent which was alleviated by a 34 percent increase in local sales volume.

“Export tea average selling prices declined by 8 percent due to subdued global economic activity as a result of the Covid-19 pandemic.

“Current year average selling prices for local tea sales improved by 83,3 percent compared to prior year,” he said.

In the current year, Macadamia production volumes improved by 27 percent from prior year’s 1 063 tonnes to 1 292 tonnes.

Average selling prices for exports declined by 7,5 percent while the average selling price for large nuts remained the same as in the prior period, the price for the small nuts and lower quality nuts came under pressure, thereby weighing down on average selling prices.

The fruit category’s production volumes of 3 195 tonnes for the current year improved by 17 percent from 2 729 tonnes produced in the prior comparative period and yields from the young orchards continue to improve.

“The selling period for stone fruit coincided with the lockdown promulgated by the Government in January 2021.
“This had an adverse effect on fruit uptake in the market. Unfortunately, most of the export markets were also depressed due to Covid-19 lockdowns implemented in various countries,” said Mr Jongwe.-The Herald