Ariston Holdings Limited Reports Tea Production Volume Increased by 2% From Last Year but was 20% Less Than in FY2022

Published On: February 2, 2024Company: Ariston Holdings Limited (ARIS.zw)
What are the measures Ariston Holdings Limited has taken to navigate the challenging business environment and what are its future prospects?
Ariston Holdings has taken several measures to navigate the challenging environment, including focusing on improving the quality of tea over quantity to increase export revenue, installing a solar energy plant to reduce reliance on generators and save costs, and implementing an out-grower model for poultry. They've also relegated growing potatoes to spare dam water due to El Nino predictions. In the future, the company aims to mitigate low rainfall impact via heavy reliance on irrigation systems, and continue their focus on cost containment, product quality, and production process improvement.

Summary

Environment

  • The season commenced with an El Nino climate condition leading to a below average rainfall accompanied by hot weather across all estates.
  • The weather conditions improved later with rainfall exceeding the previous year’s rainfall.
  • The challenging economic environment has been particularly difficult for exporting agricultural businesses due to the disparity between the Interbank rate and the fair market rate used by suppliers.
  • The local environment is characterized by further dollarisation of the economy, increasing inflationary pressures, and liquidity challenges.
  • The installation of the solar energy plant at Southdown Estate has alleviated power outages, reducing reliance on generators and associated costs, while enhancing environmental sustainability.

Business Performance

  • Tea production volume increased by 2% from last year but was 20% less than in FY2022 due to a decision to focus on quality over quantity.
  • It’s too early to predict Macadamia nut production, but despite some early drops, the overall nut set in the orchards is encouraging.
  • Other products consist of bananas as potatoes were set aside to conserve water in expectation of an El Nino season.
  • Tea sales volumes increased by 12% from the previous year and 20% from FY2022, with increasing focus on local sales due to the negative impact of export proceeds retention.
  • Macadamia nut sales were significantly higher due to sales of stock carried over from previous years.

Financial Performance

  • The group’s operations are cyclical, with most sales occurring in the second half of the year with the first quarter mainly catered to preparing for the new agricultural season.
  • Revenue increased by 5% in the current period owing to sales of stocked macadamia and increased tea sales volumes.

Outlook

  • The forthcoming agricultural season is expected to have lower than usual rainfall, with reliance on irrigation systems to mitigate impact.
  • Early indications show a steady demand for macadamia nuts, although it’s too early to predict market prices.
  • The challenging operating environment is expected to continue, with a focus on cost containment measures and improvement of product quality and production processes.

Useful links

About Ariston Holdings Limited (ARIS.zw)

Ariston Holdings Limited, listed on the Zimbabwe Stock Exchange, is an agricultural enterprise operating in diverse markets that range from tea, macadamia nuts, horticulture and deciduous fruits to fish farming, beef cattle and poultry. Ariston Holdings Limited has a national footprint, with five strategic business units located in the northern and eastern regions of Zimbabwe. Southdown Estates consists of three estates with over 1 200 hectares allocated to tea plants, almost 60 hectares to bananas, over 450 hectares to macadamia trees and 12 hectares of avocados. Claremont Estate concentrates on growing pome and stone fruit, passion fruit and potatoes; while Kent Estate focuses on horticultural crops, poultry and livestock. The company also packages and distributes blended tea for the domestic market.

Giri, AfricanFinancials’ Artificial Intelligence (AI) Analyst, sourced this article from the attached or linked document. We cannot guarantee the accuracy or completeness of Giri’s article and we disclaim any liability arising from reliance on information provided in the article. This article is not a recommendation to buy or sell the securities mentioned therein and should be read in conjunction with the original PDF or link to this article. Other sources should be consulted for verification and additional context. Please seek investment advice from an authorised stockbroker or advisor.

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