TSL Limited

TSL Limited | Abridged Group Reviewed Results for the Six Months Ended 30 April 2022

By Published On: June 29th, 2022Categories: Corporate announcement, Earnings



The operating environment remains hyperinflationary with significant increases in the price of fuel and other basic commodities being witnessed. Widely reported backlogs on the foreign currency auction system have resulted in cash flow strain for both foreign and local currency for most businesses.

The persistent global supply chain disruptions and attendant costs were worsened during the period by the Russia/ Ukraine war resulting in the unavailability, or where available, exorbitant costs of raw materials, fertilizers, and some agricultural commodities such as wheat.

The outturn of the 2021/22 rainy season was erratic with some areas experiencing delayed rains and prolonged dry spells after crops had been planted, whilst other areas experienced hailstorms resulting in the largest hail insurance payouts for the tobacco industry in many years. National maize volumes are forecast to be well below initial expectations.

The tobacco marketing season commenced on 30 March 2022, and after a month of sales, indications are that national tobacco volumes will be between 10% – 15% lower than the initial forecasts and the 211 million kgs purchased in the previous year. Pricing of the tobacco crop to date, has been firmer than in prior year as significant off-taker nations replenish their inventories and production volumes from South America are lower than anticipated.


Financial Overview – Inflation adjusted

The Directors encourage users to exercise caution in the interpretation of the Group’s abridged financial statements given the multiplicity of exchange rates prevalent in the marketplace which feed into the ZWL cost structure of the business, whilst the Group’s foreign currency earnings are translated at the auction rate.

Revenue at ZWL$3 billion is 5% above prior year and inflation adjusted profit before tax for the period is 4% below comparative period. The impact of the real increases in operating costs owing to the operating environment cannot be ignored, however, the Group continues to take stringent measures to contain costs through investment in technology, manufacturing and exploiting operational efficiencies. As of 30 April 2022, the tobacco marketing season had run for one month, and the peak of the season is expected in the Group’s third quarter.

The Group’s financial position remains solid. Local borrowings have been increased during the period to fund strategic initiatives. Interest cover remains adequate. Positive cash flows were generated from operations in the period and reinvested in the business and used to pay dividends to shareholders. The Group, supported by its customer base, has been able to restock agricultural chemicals at Agricura and hessian wraps at Propak, purchase productive assets across the business units and construct a new 9,000 square metre warehouse in Mvurwi for expanding the tobacco contract management business in line with the Group’s decentralization drive.


Agricultural Operations

Tobacco related services

The tobacco marketing season commenced on 30 March 2022, a week earlier than in the previous year. Tobacco Sales Floor (TSF) handled 6.5 milion kgs in the period 12% below the comparative period due to a general slow start of the season. TSF opened a new floor in Mvurwi to handle tobacco for contractors, adding to the business’ existing decentralized operations in Marondera and Karoi.

Propak’s hessian volumes were 28% below prior year due to the slow start of the tobacco marketing season coupled with tobacco merchants adjusting the timing of the distribution of hessian to their farmers. Volumes are expected to improve in the third quarter as the tobacco season enters its peak period. The business invested in a new tobacco paper manufacturing line which was commissioned in December 2021. This move was taken to reduce the cost of tobacco paper for the market whilst retaining the quality. The uptake of tobacco paper by the market has been pleasing with volumes 23% above prior year.

Agricultural trading

Volumes at Agricura across most product lines have been satisfactory, albeit depressed, given the erratic outturn of the summer cropping season. The business was negatively impacted by the extended global supply chain challenges which resulted in some raw materials and imported finished product not being available when required. Restocking for the ensuing season has therefore already commenced. Fertilizer volumes were, however, 14% above prior year due to product shortages in the market.

Farming operations

Commercial maize, seed maize and soya bean yields are expected to be satisfactory. Banana plantation yields have improved during the period, having fully recovered from the impact of water shortages in the previous season. The business has produced a decent quality tobacco crop and prices to date are firmer than in the previous year. Some of the tobacco was affected by a hailstorm but was fully insured.

Logistics Operations

End to end logistics services

Volumes in the Logistics business have been mixed. Tobacco handling volumes were 27% behind prior year due to a slow start to the tobacco season but are expected to improve as the tobacco marketing season progresses. BAK Logistics continues to handle and facilitate the movement of tobacco from decentralized tobacco floors to processors in Harare. General cargo volumes and freight clearing entries were 24% and 2% below prior year, respectively. There has been a sizeable increase in volumes handled through the Ports division owing to the satisfactory progress being made in running a monthly train from Maputo to Harare through Bak Logistics partnership with Unitrans and DP World. This area is expected to contribute significantly to the business as the rail operations are scaled up. Premier Forklift division recorded a 4% volume growth from new customers that have been signed up.

Vehicle rental services

Avis’ rental days are 75% ahead of comparative period due to the relaxation of lockdown measures and subsequent improvement of international travel.

Real Estate Operations

The business successfully completed the construction of a new 4,500 square metre warehouse facility in Mvurwi to aid TSF in expanding its decentralized tobacco contract management operations. This will be expanded by another 4,500 square metre warehouse in the second half of the year. The Company has also deliberately kept an existing facility in Harare vacant, in preparation for construction of a sizeable warehousing development in the later part of the year. Voids have consequently temporarily increased to 37%. These strategic investments are being undertaken to improve operating efficiencies and enhance long-term returns.


The Group continues to pursue its “moving agriculture” strategy and invest accordingly. The gestation period of the different initiatives varies; however the impact of the investments is evident. These strategic investments are expected to enhance group earnings, shareholder returns, the Group’s long-term value proposition and strengthen the Group’s balance sheet.

Investment in some key strategic initiatives undertaken in the first half of the year have already started bearing fruit and are expected to continue growing the business into the future.

The aforementioned difficulties in the operating environment will be managed to the extent possible to ensure continued value creation and pr