TSL profits up 31%

LETTICIA MAGOMBO

Listed agro-business concern, TSL Limited,  reported a 31% increase in profit for the year to October 31,2021  to ZWL$618.6m from ZWL$471m achieved in the prior comparative period due to a stellar performance by the agriculture units, Business Times can report.

Revenue grew to ZWL$3.8bn in the reviewed period from ZWL$3.4bn reported in the same period the previous year.

Board chairman, Anthony Mandiwanza, attributed the good performance to good rainfall in the reviewed period, which resulted in good yields in the maize, wheat and soya bean production for the farming sector of the group.

He said the filling up of dams  also made winter cropping easier thus, resulting in volume growth.

“The group achieved  good volume growth across  most business units. Revenue for the year grew 13% on prior year attributable to improved performance  by the agriculture based business units. The group’s financial position remains firm with the focus on shareholder value creation and preservation,” Mandiwanza said in a statement accompanying the financial results.

He said the company’s tobacco sales floors experienced a significant increase in volumes.

“Tobacco sales floor handled 24.3m kg of tobacco in the year against 15m kg in the prior year, representing a 62% increase. Of this volume 60% was on behalf of tobacco contractors in Harare and the new decentralised floors in Karoi and Marondera in line with the group’s strategic thrust.”

Other sectors that experienced volume growth include Propak Hessian which was 15% ahead of its previous year.

It achieved this due to 26% increased volumes from tobacco merchants and a 36% volume decline in the independent auction segment, Mandiwanza said.

Another factor, Mandiwanza stated, was the fact that the business invested in installing paper packaging which allowed for competitively-priced locally produced paper packaging to be supplied locally and into the region.

Agricura achieved strong volume growth across most product lines due to increased market share, stock availability and attractive pricing particularly on locally manufactured products.

Avis rental days were up by 69% due to less stagnant lockdown restrictions and commencement of international travel when compared with the prior year.

In terms of logistic operations. Bak Logistics recorded volume growth distribution (48%), ports (51%), transport (20%) and tobacco handling 2%.

This was attributed to new clients being signed up and the commencement of transport services from decentralised tobacco floors as well as the commencement of a rail service from Maputo to Harare.

Real estate operations occupancies also remained satisfactory and void levels decreased compared to prior year.

However,  Mandiwanza said the company was not immune to the challenges that affected most businesses during this period particularly due to high interest rates which went as high as 45% and an increase in operational costs which resulted in a 9% decrease in operational profits.

These  high costs were a result of exchange rate discrepancies incurred when dealing with local suppliers.

“The operating environment was difficult. Interest rates on local currency borrowings were unsustainably high. Reported backlogs in foreign currency settlement on the interbank auction system resulted in a widening disparity between the official rate and the rates obtained in the marketplace, spurred divergent multiple exchange rates and pricing mechanisms in the business environment,” Mandiwanza said.

He said the group continues to pursue its “moving agriculture” strategy in a difficult operating environment and to invest accordingly to create and preserve shareholders value.