Tanganda explores cost cutting measures

LISTED agro industrial firm, Tanganda says it will devise cost containment measures in order to reduce the impact of rising inflation and exchange rate volatility on profit margins.

The local currency has been facing strong headwinds characterised by a spike in inflation and deteriorating exchange rate against the United States dollar on the auction market, with parallel market exchange rate almost double the official exchange rate.

According to Tanganda, geo-political instability in Russia and Ukraine has exacerbated disruption of supply chains ,also stoking global inflation in the process leading to higher operational costs and limited consumer spending.

However Tanganda managed to bypass significant hurdles in the third quarter to June 2022,recording a better profit after tax surpassing the previous year performance in both inflation adjusted and historical cost terms.

“The company is focusing on cost management to mitigate the adverse impact of rising inflation and exchange rate volatility to profit margins,” said Tanganda in its third quarter trading update.

In the update, Tanganda indicated that its packed tea sales volumes were five percent below the same period last year given the global shipping and supply crisis as well as depressed disposable income on the domestic market.

Tanganda’s revenue for the quarter under review stood 135 percent ahead of the previous financial year in historical terms attributed to volume growth in the majority of its commodities.

Avocado production at 3 494 tonnes was 12 percent above 3 108 tonnes achieved in the same period last year while macadamia nuts production grew two percent to 1 072 tonnes from yesterday’s 1048 tonnes.

Coffee export volumes were 14 percent above the same period prior year.

Resultantly, the concern’s revenue for the nine months to June grew by 84 percent.

“Revenue from export of avocado fruit and macadamia nuts is expected to be recognised in the last quarter of the financial year,” said the company.

Going forward Tanganda expects yields of avocado and macadamia to increase, with enhanced maturity profiling of plantations over the next three to five years.

The solar plants constructed at three of the five estates have significantly reduced reliance on power from the national grid.-ebusinessweekly