Listed agro-industrial firm, Ariston Holdings’ profit fell 66% during the year to September 30, 2020 from a year ago, as quiet trading took a toll.
The group posted a full year profit of ZWL$143m from ZWL$417m recorded in the prior comparative period.
This comes after revenue for the group slumped 20% to ZWL$619.45m in the reviewed period from ZWL$773.44m achieved in the prior comparative period.
The group’s operating profit before fair value adjustments, exchange gains and losses and monetary loss declined 64% to ZWL$132m from ZWL$369m recorded in the prior comparative period, primarily due to mismatch in exchange rates used to convert the export revenue streams and the underlying exchange rates carried in local costs.
“Revenue trailed inflation growth as the majority of the group’s revenue is from United States denominated exports which are converted to Zimbabwe dollars using the interbank rate which did not increase in line with inflation,” Ariston chairman Alex Jongwe said in a statement accompanying the company’s financial results published this week.
Operating costs, however, increased by 49% to ZWL$214m from ZWL$143m due to local suppliers using an implied exchange rate greater than the interbank rate, thus driving costs upwards.
Cost of production during the reviewed period, however, declined 7% compared to prior comparative period as a result of sourcing and paying for the majority of the products in USD as part of cost containment measures.
Borrowings were kept at a minimum in the period under review.However, the group maintained its offshore long term loan which is the one generating the unrealised exchange losses.
Ariston spent about ZWL$80m during the reviewed period, towards increasing production capacity which was 40% higher than ZWL$57m spent the same period last year.
Significant investment was put into increasing the capacity of the macadamia drying facility, improving the dams and irrigation systems affected by Cyclone Idai in 2019.
“The group continued to invest heavily in capital expenditure which was primarily funded from own internally generated funds.
“Further the tea factories were refurbished with new equipment being installed at two of the three tea factories owned by the group,” Jongwe said.
On operations, tea production volume declined 14% to 2,582 tonnes from 2,985.
Average selling price for export tea declined 10% in the period under review.
“However due to the economic slowdown introduced by the Covid-19 pandemic, demand was subdued for the greater portion of the year,” Jongwe said.
Macadamia production volume declined 18% from the prior year’s volume of 1,301 tonnes to the current year volume of 1,063 tonnes.
The fruit category for the company comprises stone fruit, pome fruit, banana and avocado.
Pome fruit production improved 5% while stone fruit, banana and avocado declined 5%, 24% and 40% respectively when compared to the prior comparative period.
The other crops category include commercial maize, seed maize, sugar beans, potatoes, poultry, represented 12% (17% in prior comparative period) also contributed positively to the group’s performance.