Zimbabwe based agricultural firm Ariston Holdings feels pinch of offloaded fruit unit

ZIMBABWE – Ariston Holdings, a listed diversified agricultural firm in Zimbabwe, has reported a 14% decline in revenue in the half year ended March 31, 2022 to ZWL 634.9 million (US$1.75m).

The decline in top-line performance is attributed to drop in tea sales volumes and non-inclusion of the fruit category in the group’s income.

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During the 1st quarter of the year, the group received proceeds from the disposal of 50% of its shareholding in Claremont Orchards Holdings (Private) Limited to Tuinbouw Zonder Grenzen BV (TZG).

As a consequence of this transaction, the fruit category is not included in the revenue for the current period.

Meanwhile both local and export tea sales volumes suffered a 10% and 22% drop, respectively. There was a slow uptake of export teas in the first quarter of the year due to the effects of the COVID-19 pandemic on shipping logistics and costs. However, demand started improving in early March 2022.

Its export sales volumes for Macadamia were 47% ahead of the prior comparative period due to sale of some prior year macadamia stocks at the start of the current year.

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This resulted in the reflected sales volume increase compared to prior comparative period. Pricing reflected a 16% decline against the same period in prior comparative period.

Ariston Holdings realized an inflation adjusted profit before interest and tax of ZWL94 million (US$259,000) in the half year ended March 2022, compared to ZWL204 million (US$563,000) in the prior comparative period.

Its other businesses comprise of potatoes, soya beans, seed maize, commercial maize, seed sugar beans, avocado, bananas and poultry.

These contributed 27% of revenue compared to 17% in prior period showing that this category continues to grow and contribute positively to the Group’s profitability.

It is important to note that, the widening of the exchange rate gap between the interbank auction rate at which the group’s export revenue was retained and the parallel exchange rate that suppliers are charging for locally purchased goods continued to put substantial pressure on costs due to mismatch in the two rates.

This resulted in a 57% increase in cost of sales. Gross profit margin declined to 34% compared to 63% in the prior comparative period.

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Loss from operations was 22% of revenue compared to a profit from operations at 19% of revenue in the prior comparative period.

The Group realised an inflation adjusted profit before interest and tax of ZWL94 million (US$259,000), compared to ZWL204 million (US$563,000) in the prior comparative period.

This was after taking into account fair value adjustments, exchange differences, share of profit from investments in joint ventures and the monetary loss.

Inflation adjusted interest expense declined by 1% to ZWL21.5 million (US$59,400) in the current reporting period.

Overall, Ariston posted an inflation adjusted profit after tax of ZWL103 million (US$284,000), which is a 111% improvement on prior comparative period’s ZWL49 million (US$135,000).

The Group’s activities are cyclical in nature with the majority of harvesting and selling operations occurring in the second half of the year.

To this end it expects to have higher yields than prior year, a softening in the export price of macadamia nuts and improvement in export tea price.

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