TSL Limited

TSL Limited HY2023 Analyst Briefing Presentation

By Published On: July 7th, 2023Categories: Corporate announcement, Earnings

Operating Environment

Economic Environment

  • Operating environment remained difficult.
  • Effects of global and local inflation witnessed – including agricultural inputs.
  • Local currency continued depreciation against USD – widening gap between official and alternative market rates – Pricing challenges.
  • Economy increasingly dollarized.
  • Erratic power supply – increased cost of doing business.

Agricultural Sector

  • Reasonable summer cropping season across most of the country – generally adequate rains.
  • Tobacco marketing season commenced 8 March 2023, 6 weeks earlier than prior year.
  • National tobacco crop sold by end of April 2023, 35% ahead of prior year at 134 million kgs.
  • Average tobacco price remained firm at US$3 per kg, marginally ahead of prior year.
  • National tobacco crop volumes to set new record high.

Performance Overview

Group Performance

  • Directors advise caution in interpretation of Group financial statements.
    • Numerous exchange rates prevalent in the marketplace-inflating ZWL cost structure
    • Group’s foreign currency revenues recorded at official exchange rate.
  • Strong volumes growth across all businesses.
  • Tobacco-related businesses have done particularly well.
  • Enhanced profitability attributable to focus on executing the Group Strategy:
    • Investment in expanding capacity,
    • Utilizing technology,
    • Improving operating efficiencies,
    • Securing new business and
    • Deployment of capital for value.

Financial Position

  • Financial position remains sound.
  • Positive operating cashflows generated – reinvested in expansion of operations and dividend payments to shareholders.
  • Foreign minority shareholder in Agricura successfully bought out – Group now owns 100%.

Business Overview

Agri – Inputs

  • Strong volume growth was recorded in most product lines.
  • Business sufficiently stocked for summer season.
  • Introduction of new product lines improved volume performance.
  • Hessian volumes 71% ahead of prior year – adequately stocked to meet increased demand from larger tobacco crop.
  • Market share continues to increase.
  • Some hessian was exported into the region – first time in many years.
  • Tobacco paper volumes 59% ahead of prior year – positive response from market to locally produced paper from recently installed paper production line.

Farming

  • New banana plantation went into production – 87% volume growth.
  • Additional 25 Ha of new bananas planted – export market.
  • Satisfactory seed and commercial maize and soya bean yields.
  • Satisfactory tobacco crop yields and acceptable prices achieved to date.

Market Places

  • Significant increase in volumes – focus on decentralization and serving contractors.
  • Volumes handled on contract up 44% and on independent auction up 63%.
  • Recently completed Mvurwi Floor performed reasonably well.
  • Earlier start of tobacco selling season by 6 weeks.

End to End Logistics

  • Distribution volumes up 51% – increased volumes from existing customer base.
  • International Services volumes up 40% – increased use of rail from Maputo.
  • Some lithium and sulphur handled for customers on rail prior to SI 213/2022 banning export of unprocessed lithium.
  • Freight forwarding and bond store volumes buoyed by sulphur business.
  • Forklift hire hours up 19% – increased business from key customers.
  • Tobacco handling volumes up significantly and transport volumes up 39% – new business model supporting customers throughout the value chain.
  • Rental days up 13% – increased international travellers.

Infrastructure

  • Voids improved to 12% from 37% – increased demand for warehousing space.
  • 9,000 square meter Mvurwi warehouse completed in time for tobacco marketing season.
  • Demolition of dated warehouse in a prime location in Harare completed.
  • Construction of new world class 15,000 square meter warehouse to commence in H2.

Outlook & Prospects

  • The Group continues to pursue several strategic initiatives aligned to the “Moving Agriculture” strategy that are expected to have far-reaching benefits for the market-place.
  • The difficulties in the operating environment are expected to persist and the business will focus on continued sustainable value creation and preservation.

Download the full presentation

TSL Limited HY 2023 analyst briefing presentation

The contents of the post above were obtained from third parties, which We, AfricanFinancials, believe to be reliable. However, We do not guarantee their accuracy and the above information may be in condensed form. The reader is encouraged to refer to the original source of the information, which, in most cases, is in PDF format and on the originating company's letterhead. While We endeavour to replicate the original content accurately, We cannot guarantee the absence of errors in the above article and We disclaim any liability regarding reliance on information provided in this article.