Agriculture concern Ariston Holdings Limited is upbeat of increased export volumes for financial year 2021 driven by improved yields.
The good weather already experienced in areas with the group’s key operations, is commendable and expected to result in good yields.
This will offset the declines experienced during FY2020.
Unfavourable weather experienced in 2019 and 2020 had a knock-on effect on the group’s operations.
But management is upbeat the current agriculture season will work in the group’s favour going forward with normal to above normal rainfall expected.
Group chairman Mr Alexander Jongwe, has indicated the start of 2021 season in Chipinge and Chimanimani where the majority of the group’s agriculture assets are located, has commenced on a good note.
“Cooler and wetter weather has been experienced. The extremely high temperatures experienced in 2019 and 2020 were not encountered. It is on this basis, that we believe 2021 season will bring improved yields across the group.
“Volumes into the export markets are expected to exceed prior year given improved yields,” said Mr Jongwe in a statement accompanying the group’s results for the year ended September 30, 2020.
According to the group, subsequent to year end tea production and sales have remained firm with improvements being bogged in prices. Markets for macadamia are also expected to remain firm as 2020 season ended with global demand ahead of supply.
During the year to September 30, 2020 macadamia volume went down 18 percent to 1 063 tonnes from prior year’s 1 301 tonnes but average selling price for experts imported by 4 percent.
Tea production fell 14 percent to 2 582 tonnes. Average selling price for export tea also declined 10 percent during the year under review.
Although this was a record year globally for tea production, the outbreak of Covid-19 pandemic had a knock on effect on demand resulting in selling prices coming under pressure.
As such, producers were pushed to sell their possessions before the new season.
The fruit category which comprise some pone fruit, banana and avocado registered a 35 percent growth in revenue although stone fruit, banana and avocado production declined 5 percent, 25 percent and 40 percent respectively.
Overall, the group’s revenue went down 20 percent to $619 million. Cost of production declined 7 percent when compared to prior year as a result of sourcing and paying for most products in USD as part of cost containment measure.
Operating cost however, increased by 49 percent as suppliers used an implied exchange rate above the official interbank rate.
Profit after tax went down 66 percent to $143 million. Borrowings were kept at a minimum in the period under review.
Ariston invested $80 million in capex mainly towards increasing macadamia drying facility, improving the dams and irrigation systems that were affected by Cyclone Idai in 2019. The group also refurbished tea factories. The group did not declare a dividend to preserve capital.