LIVINGSTONE MARUFU
Listed agro-business concern, TSL Limited is pursuing a value preserving strategy that will help it weather Covid-19 and inflationary storms, Business Times can report.
The strategy comes against the background of a very volatile operating environment where there was a significant increase in pricing across the market.
In a trading update for the quarter to July 31 2021, TSL company secretary James Muchando said the strategy will create value for shareholders and ensure continuity.
“The group continues to pursue its “moving agriculture” strategy in a difficult operating environment and to invest accordingly to create and preserve shareholder value,” Muchando said.
He said the availability of foreign currency and appropriately priced financing will assist in taking advantage of the existing growth opportunities.
“The effects of the global Covid-19 pandemic, particularly on global supply chains, continue and require ongoing management,” Muchando said.
TSL recorded a 9% increase in revenue during the trading update ended July 31 2021 due to relative stability in the market and good agricultural season.
He said national tobacco volumes of 200m kilogrammes as of July 31, 2021, are 13% above the prior year, whilst the tobacco national average price at US$ 2.78/kg is 11% ahead of the prior year.
A good rainfall season has ensured that the output of other agricultural commodities is likely to be well ahead of the previous season.
The group achieved good volume growth across most business units and remains profitable.
Adequate interest cover on borrowings was maintained with most working capital requirements funded from internally generated resources.
Tobacco Sales Floor handled 16.7m kg of tobacco in the quarter against 6.9m kg handled in the comparative period, an increase of 143%.
Of this volume, 60% was on behalf of tobacco contractors in Harare and the new decentralized floors in Karoi and Marondera in line with the group’s strategic thrust.
Propak hessian volumes are cumulatively 21% ahead of prior year.
Due to the earlier start to the tobacco trading season, most of these volumes were delivered in the first half of the year and consequently the volumes in this quarter are 30% lower, reflecting this timing difference.
Agricura achieved strong volume growth across most product lines due to increased market share, stock availability and attractive pricing particularly on locally manufactured products.
The prior year drought adversely affected yields for tobacco, banana and chillies as water had to be rationed due to low dam levels.
However, the above-normal rainfall season has resulted in good yields for the maize, seed maize and soya bean crops.
Bak Logistics recorded good volume growth over the prior year in tobacco handling (28%), distribution (36%), ports (285%), and transport (117%) divisions.
This growth was attributable to new clients being signed up and the commencement of transport services from decentralized tobacco floors.
Storage volumes in FMCG and General cargo were well below the comparative period, due to global supply chain disruptions which resulted in products being moved directly to consumers.
Handling volumes at Premier Forklifts improved by 28% in the quarter while forklift sales remained depressed as customers slowed down on capital projects.
Avis’ rental days are up 121% in the quarter due to lighter lockdown restrictions and commencement of international travel when compared with the prior year.
Occupancies remain satisfactory and voids levels are comparable to the prior year.
