Volatile operating environment afflicts Ariston 

LIVINGSTONE MARUFU

Publicly traded agricultural concern Ariston Holdings has raised concern over a persistently difficult operating environment, citing acute local currency liquidity shortages and ongoing power outages that continue to derail efforts to restore profitability.

Chief executive officer Leon Nortier said structural challenges in the economy now outweigh recent signs of inflation and exchange rate stability, arguing that meaningful recovery in the agriculture sector will depend on urgent improvements in electricity supply and local currency availability.

“The challenging operating environment experienced in the prior year persisted throughout the financial year. Global market disruptions continued to negatively impact the agricultural sector, although some minor improvements were observed. Fertiliser and chemical costs remained elevated, staying above pre-Covid-19 levels,” Nortier said.

He said the domestic economy remained under severe strain, characterised by weakening disposable incomes, frequent power outages and constrained availability of the Zimbabwe Gold (ZiG) currency. These factors, he said, continue to restrict customer payments and deepen liquidity challenges across the market.

“The local trading environment also remained predominantly United States dollar based during the year, amid ongoing liquidity challenges associated with the local currency,” he added.

Nortier noted that persistent cost pressures from key inputs, including electricity, fertilisers and crop chemicals, continued to weigh on operations, although mitigation efforts such as solar energy adoption helped cushion some of the impact.

The group has been deriving benefits from its solar energy plant at Southdown Estate, commissioned in July 2023, which has reduced reliance on diesel generators and lowered maintenance costs while supporting sustainability objectives. However, these gains were partly offset by rising grid electricity tariffs during the period.

Revenue for the year declined 21% to US$5,6m, largely due to lower macadamia production volumes. Cost of production fell 32%, reflecting management’s cost containment measures, including staff rationalisation and tighter control of discretionary spending, as well as reduced output levels.

Despite pressure on core operations, the group’s joint ventures — Bonemarrow Investments (Private) Limited, trading as Claremont Power Station; Claremont Orchards Holdings (Private) Limited; and Mombe Shoma (Private) Limited — continued to contribute positively to overall performance.

Finance costs rose 46% year-on-year, driven by higher borrowing levels and elevated interest rates, further straining the group’s bottom line. Overall, Ariston recorded a 27% reduction in its loss for the year before other comprehensive income.

In the agricultural divisions, tea production declined sharply by 51% to 1 487 tonnes from 3 070 tonnes in the prior year, mainly due to agronomic and climatic challenges. Management said it prioritised the local market during the period, where demand remained firm and pricing offered relatively stronger margins compared to exports.

Export volumes were deliberately reduced amid subdued global prices, with available output redirected to the domestic market. However, tea revenue still fell 27% due to the steep drop in production, while total tea sales volumes declined 21%.

Macadamia output also weakened, falling 22% to 1 090 tonnes, with total sales of 845 tonnes. Although average selling prices improved on the back of recovering global demand, the gains were insufficient to offset lower volumes.

The group’s “other products” segment — comprising commercial maize, seed maize, soya beans, avocados and bananas — accounted for 18% of revenue and grew 7% year-on-year, supported by improved climatic conditions during the 2025 agricultural season.

Normal to above-normal rainfall across operations, particularly at Kent Estate, supported increased dryland cropping activity, reversing some of the previous year’s El Niño-induced disruptions. However, Ariston said it will continue to rely heavily on irrigation infrastructure to stabilise production.

While the season began under extremely hot conditions, management remains cautiously optimistic that these pressures will ease in the remainder of the cycle. Tea production has also started satisfactorily, with only marginal declines compared to the prior period, while macadamia orchards have shown a good nut set broadly in line with expectations.

Indicative export prices for macadamias in the new season are higher than last year, with growing interest from buyers seeking early offtake agreements — a potential positive for future revenues.

Looking ahead, Ariston said it will continue prioritising production efficiency, cost containment and quality improvements as it seeks to stabilise operations and support long-term shareholder value in an increasingly constrained operating environment.