eBusiness Weekly
Kudzanai Sharara
Diversified agro-industrial concern, Ariston Holdings, which is also listed on the Zimbabwe Stock Exchange, has now entered a period of sustained profitability as the firm starts enjoying higher sales volume across its product range, chief executive officer Paul Spear told shareholders on Tuesday.
The group reported its first operating profit since dollarisation for the period ended 30 September 2018.
Operating profit of the period to September 30, 2018 amounted to $3,6 million up from a loss of $1,4 million for the comparative prior year.
Before this, the group would only report profits after factoring in fair value adjustments on its biological assets.
Biological assets comprise of produce growing on the bear plants, seasonal crops, livestock and poultry and timber.
Ariston is a producer and exporter of tea, macadamia, avocados, stone fruits, broilers among other biological assets.
However, Spear said the group has now entered a period of sustained profitability even without fair value adjustment.
He said the group is forecasting higher sales volume across its product range for the 2019 financial year with apples expected to double in two years’ time.
“Revenue will continue to be more export oriented with export earnings increasing year on year. Early indications are that export prices and demand will continue to be firm in financial year 2019,” said Spear.
“The 2019 agricultural season has commenced on a good note with the group’s financial position continuing to improve. The majority of our crops are destined for the export market, and as long as the group continues to focus on quality and maintaining its international accreditation, the strides made in 2018 will be improved upon.”
Spear also revealed that apart from normal profits, the group had applied and received a higher export incentive of 11 percent from the previous 6 percent.
The Reserve Bank of Zimbabwe introduced an export incentive scheme on all exports in May 2016 to promote growth, productivity and development of the export sector to enhance foreign currency inflows.
Spear said the group would welcome the continuation of the export incentive scheme after receiving more than $2,7 million in the 2018 financial year up from $800 000 received in the comparative prior year.
“Return to profitability has enabled accelerated debt repayment. By year-end, debt should be reduced to 40 percent of the current position.”
The group has also been channelling resources towards ‘‘heavy investment in capital expenditure as it retools for maintenance and further expansion of production base, where there are opportunities including expansion of drying capacity for macadamia nuts,” said Spear.
In 2018, the group’s revenue increased by 29 percent from $11,0 million recorded in prior year to $14,1 million in the current year.
Gross margin for the year increased to 36 from 31 percent in prior year. Operating expenses declined by 4 percent as cost cutting measures introduced continue to bear fruit.
Profit before taxation of $3,7 million was achieved compared to a loss before taxation of $1,5 million in prior year.
