Ariston seeks to improve export quality products

Listed horticulture concern – Ariston Holdings Limited says the group is focusing on improving product quality as it seeks to increase volumes in the export market and boost foreign currency earnings.

This comes as an improvement has been experienced in the average selling prices of both local and export tea and this is expected to continue.

According to the group, early indications on macadamia production volumes and quality are showing an improvement.

Although dry spells experienced in October last year delayed the start of the current year’s tea harvesting, there have been improvements noted since November and production levels are now on an upward trajectory.

Additionally, the group is also banking on the projected normal to above normal rainfall this year which will enhance production volumes.

“In this current year, the group has increased its focus on improving tea quality so as to grow its export sales volumes as the local economy is expected to continue to face headwinds.

“This shift in focus will result in lower tea production than in prior year in terms of overall quantity but will result in higher volumes of export grade teas than in the previous year.

“Increased export sales will translate to increased profitability which mitigates against the effect of the low performance of the local market on the group’s financial well-being. Results on the ground so far, have shown that this strategy will improve overall tea performance,” said Ariston in a trading update for the first quarter to December 31, 2022.

The harvest of macadamia nuts begins in March hence the minimal production levels. The volumes for early drop macadamia nuts were 91 percent ahead of the prior comparative period.

Ariston’s poultry is produced on an out-grower model for the largest producer in Zimbabwe. There was a reduction in the number of poultry placements in the current period, thereby resulting in a decline in produced volumes. The reduction was due to the timing of placements, according to the group.

Other products consist of potatoes and bananas. Banana production volumes rose 14 percent above the prior comparative period due to the heavier rains received in the current period.

In the current period, planting of potatoes was delayed to avoid losses normally experienced when the fields are too waterlogged for potato harvesting.

As a result of changes in timing of potatoes, harvesting commenced in January 2023, whilst in prior year, harvesting occurred in December. Thus the timing difference resulted in a 32 percent decline in production volume at the end of the quarter.

During the period under review, total tea sales volume was above the prior comparative period as the group closed the financial year ended 2022 with some tea stocks which were sold in the current period.

The global economic activity recovered from the impact of the Covid-19 pandemic while global shipping shortages have improved resulting in a 229 percent increase in export tea sales. Local tea sales volumes registered a 102 percent increase in volume as demand from local customers improved.

Macadamia nut production volumes increased during the period although sales volumes declined as the prior period had late macadamia exports which did not occur in the current year.

In terms of financial performance, revenue for the quarter went down 27 percent attributable to potatoes which were sold in December in prior year whereas in the current year, these were sold in January 2023.

“Further, timing of poultry placements contributed to the revenue decline and the late season macadamia export in prior year boosted prior year revenue.

“Overall, these issues are all about differences in timing and will reverse as the year progresses,” said Ariston.-ebusinessweekly