Tanganda suffers sharp plunge in HY1 bottomline

STAFF WRITER

Tanganda Tea Company Limited, the counyry’s largest tea and horticultural exporter, has suffered a staggering 73% decline in profit after tax for the half-year to March 31, 2025, as tight liquidity conditions, adverse weather patterns, and falling demand took a toll on operations.

According to the company, profit after tax fell to US$539,983, sharply down from US$1.97m recorded during the same period last year. The plunge in earnings was primarily attributed to a 27% drop in revenue, which slumped to US$8m  from US$11m in the comparable period in 2024.

Chairman Herbert Nkala cited a challenging economic climate, marked by policy-induced liquidity constraints, weak aggregate demand, and an unfavorable adjustment to foreign currency retention thresholds.

These headwinds, he noted, particularly affected exporters like Tanganda that rely heavily on international markets for earnings.

“The reduction of the exporters’ retention threshold from 75% to 70% in February 2025 exacerbated the viability challenges for exporting businesses,” Nkala said.

Tanganda, which earns a significant portion of its foreign exchange through exports of avocados and macadamia nuts to the European Union, experienced a tough trading environment.

The company’s bulk tea segment, a core revenue driver, was especially impacted by erratic weather, resulting in a 6% decline in production to 4,736 tonnes, down from 5,032 tonnes last year.

The first quarter of the financial year was particularly hit by delayed and inconsistent rainfall coupled with extreme heat, which affected both the quantity and quality of tea yields.

Although there was a modest recovery in the second quarter, bulk tea export volumes still fell 28% to 2,174 tonnes compared to 3,005 tonnes a year earlier.

Moreover, global tea prices offered little relief.

Tanganda reported an average export selling price of US$1.29 per kilogramme, representing a 4% year-on-year decline.

In a bid to diversify income streams and cushion against volatile tea markets, Tanganda has been expanding its presence in the macadamia and avocado sub-sectors.

While macadamia nut harvesting commenced late in the reporting period, a backlog consignment of 286 tonnes, which was delayed last year due to global logistical challenges, was successfully shipped in the first quarter.

Encouragingly, Nkala reported early signs of improvement in macadamia prices, saying:

“Based on exports made after the reporting period, global macadamia nut prices are firming up.”

The company has also entered into a joint venture with Netherlands-based Trade Link Global BV to process avocado oil at its Tingamira Estate. The avocado oil extraction plant, completed in May 2025, has already begun exporting oil to established international markets, which is expected to bolster foreign exchange inflows in the coming months.

However, not all horticultural segments fared well. Coffee exports plummeted by 78%, with volumes falling to 13 tonnes from 58 tonnes in the previous comparable period. This was largely due to the same unfavorable weather conditions that affected the tea crop.

Despite the tough operating environment, the company managed to contain operating expenses, which stood at US$3.49m, marginally down from US$3.54m in the prior period.

One silver lining for the company was an improvement in its liquidity position.

Tanganda reported a current ratio of 1.62, meaning it had US$1.62 available for every US$1 in current liabilities, a strong cushion for short-term financial obligations. This was boosted by fair value gains on biological assets and fruit on bearer plants, which surged to US$4.45m, up from US$112,173 previously.

As a result, the company’s total assets rose to US$38.65m, a notable increase from US$35.14m in the comparative period last year.

Nkala remained cautiously optimistic, stating that while the company is operating in an unpredictable macroeconomic landscape, demand for Tanganda’s products remains relatively strong in local, regional, and international markets.

“The company will continue to pursue sustainable market diversification strategies to strengthen its regional and global footprint,” he said. “We have also implemented mitigating strategies aimed at improving operational efficiencies and managing costs to support future performance.”

Tanganda is also actively exploring capital-raising initiatives, which are expected to strengthen the balance sheet and support ongoing investments in processing infrastructure and value addition.

Looking ahead, Tanganda’s growth prospects will hinge on weather normalisation, continued global demand for high-value crops like avocados and macadamias, and Zimbabwe’s broader economic reforms, particularly those that affect the export sector. The full impact of the new avocado oil processing plant and firmer nut prices could position the company for a stronger second-half recovery.

Nonetheless, until macroeconomic stability improves and access to forex becomes more predictable, Tanganda, like many Zimbabwean exporters, will remain exposed to significant risks beyond its control.