TSL revenue up 106%

BUSINESS REPORTER

 

TSL Limited’s revenue more than doubled in the first quarter ended January 31,2023 buoyed by firmer volumes in the agri-inputs business and a stronger performance in the logistics business.

The revenue growth was also driven by the increased uptake of tobacco packaging materials by customers in anticipation of the earlier start to the tobacco marketing season, the company said in a trading update.

“Revenue grew by 106% and 606% in inflation-adjusted and historical terms respectively for the quarter,” company secretary Fadzayi Pedzisayi said in an update for the quarter under review.

TSL said high interest rates on ZWL borrowings had become “uneconomically high” and the group repaid its ZWL borrowings during the quarter, resulting in a decline in the already low gearing of the group.

Last year, the central bank hiked the interest rate to 200% per annum from 80% to curb speculative borrowings it blamed was fuelling the rout of the local currency. The bank policy rate was later reduced to 150%.

“Sizeable capital projects, which are expected to enhance the earning capacity and quality of the Group, are at various stages of execution and will see an increase in the group’s level of borrowings on the back of more sustainably priced facilities,” Pedzisayi said.

TSL said volumes for hessian wraps and tobacco paper were “significantly” ahead of prior year due to the earlier start of the tobacco marketing season which saw Propak Hessian ramping up the supply and distribution of tobacco packaging materials.

It said Agricura’s major product lines recorded good volume growth last year, with improved product availability and market reach.

In the logistics business, handling volumes are significantly ahead of prior year as the unit acquired  additional business from both existing and new customers. Volumes in the International Services Division, for the quarter, were 46% ahead of last year due to the Maputo rail service and the commencement of an additional rail service from Beira, TSL said.

“The introduction of a reliable rail service is a positive move with a far-reaching impact on businesses in-country and within the region,” Pedzisayi said.

Volumes were depressed in the supply chain division and FMCG distribution.

In the outlook, Pedzisayi said the group would continue to strategically invest to solve several key challenges facing the economy in pursuit of the “moving agriculture” strategy.

“The agribusinesses are expected to benefit from a larger tobacco crop and what is anticipated to be a good marketing season. The logistics business will continue to scale up rail volumes across a broad spectrum of commodities from both Maputo and Beira ports and widen the customer base. The difficulties of the operating environment are expected to persist and will need to be proactively managed to ensure ongoing value creation and preservation,” Pedzisayi said.

 

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