eBusiness Weekly
Business Writer
AGRO-INDUSTRIAL concern, Ariston Holdings, says utilisation of its irrigation capacity has been largely constrained by power cuts and below normal rains received in the previous season and incessant power cuts.
In its financial statement for the half year ended March 31, 2020, Ariston Holdings said the use of generators for irrigation and production processes negatively affected the firm’s net margins.
“The rains for the 2020 agricultural year were below normal. Whilst the group relies extensively on its installed irrigation capacity, utilisation was
adversely affected by incessant power outages experienced,” it said.
The group’s inflation adjusted revenue for the half year reflects a 23 percent increase to $76,07 million from $61,82 million realised during
the comparative period. Revenue growth was driven by improved pricing
achieved on macadamia due to quality improvement as well as improved
local pricing of horticulture products sold during the period.
Costs of production increased by 47 percent relative to the prior comparative period as a result of local suppliers using an implied exchange rate greater than the interbank rate, thus driving costs upwards.
Export revenues were, however, converted using the interbank rate. Operating expenses were kept under control despite inflationary pressures, reducing by 17 percent against the prior
comparative period.
The group posted a loss from operations for the period of $14,77 million, which was down 25 percent from the prior comparative period’s inflation adjusted loss from operations of $19,79 million.
On the overall, Ariston posted a loss before interest and tax of $8,96 million compared to a profit of ZWL$33,49 million for the prior comparative period.
“The current period loss is largely driven by the fact that the $ revenue recognised on export crops is determined by converting the US dollars earned using the interbank rate, which lags behind inflation, while inflationary pressures exist on production costs, hence resulting in reported
performance reflecting losses,” said Ariston.
On the impact of Covid-19 pandemic, Ariston said tea harvesting slowed down due to a decline in head count as a result of implementation of social distancing rules.
Export tea sales are subdued as the movement of tea samples is affected by airlines since demand for travel plummeted.
“This is expected to result in 20 percent reduction in overall tea sales. Reduction in global tea demand has resulted in a 10 percent reduction in selling prices.
“Harvesting of macadamia, fruit and other horticultural products is unaffected with adequate labour for the operations existing on the estates,” he said.
