eBusiness Weekly
Kudzanai Sharara
A strong agricultural season saw TSL Limited report a plausible set of results that showed a top line growth of 7 percent to $50,5 million for the year ended October 31, 2017, up from $47,2 million prior year comparative.
Presenting the full year results early this week, CE Washington Matsaira said operating profit was up 24 percent to $7,0 million while profit after tax jumped 75 percent to $4,8 million.
Group operations executive, Derek Odoteye, attributed the disparity between operating profit and profit before tax to changes in accounting standards. Positive fair value adjustments and reduced finance costs also contributed to the differences.
The financial year was a tough one for the group with only its agriculture related businesses recording growth in both the top line and bottom line.
Matsaira, however, said the overall out turn was positive despite some clusters being impacted by the difficult macroeconomic environment. He said the results reflect a good balance in the growth of the business as well as sustainability.
Agriculture operations saw revenue increase 37 percent to $29,1 million from $21,1 million with the company once again dominating the tobacco auction floors where it enjoyed a 60 percent market share.
The overall growth over prior year also reflects the expansion of the client base with volumes handled for merchants increasing significantly. This is despite the national tobacco output decreasing by 7 percent to 189 million kilograms due to excessive rains in some parts of the country.
The group’s agricultural trading also recorded strong growth in both turnover and profitability benefiting from a favourable rainfall season and the expansion of its distribution footprint.
The results speak to the potential that the country has in agriculture. The only worry though is that the sector is prone to the vagaries of drought.
Fears of drought are already being echoed across the board with delegates who attended the CZI Economic Symposium expressing fear that if drought is to occur it might derail economic growth.
While the agricultural concerns recorded reasonable growth, it was not the same with the other clusters that recorded a drop in both revenue and profits.
Subdued performance was recorded in the logistics cluster as it suffered from lower volumes of goods moved across border and within country.
The logistic businesses recorded a decline in volumes to $14,5 million from $18 million prior year comparative.
Profit was down to $792,137 from $1,2 million as the division suffered from low volumes in its general cargo business, inland ports and distribution division.
The out turn speaks to the forex challenges that the country is facing which has resulted in reduced imports. Delays in the movement of fertilizer were also given as a drag.
Real Estate businesses also recorded a decline in both revenue and profits with Matsaira saying performance was impacted by increasing stock of unoccupied industrial properties.
The issue of increased voids and lower rentals has had a negative impact across the real estate sector for some years now. Revenue for the cluster amounted to $3,8 million down from $4,7 million prior year comparative.
Profit was also lower at $1,6 million against $2,1 million prior year.
Looking at the balance sheet, trade and other receivables dropped to $8,9 million from $9.5 million while trade and other payables also decreased to $3,5 million from $4,3 million. Net cash generated from operating activities decreased to $3,6 million from $5,3 million.
Going forward Matsaira said the company would look at improving auctioning processes to attract both independent and contract tobacco.
“We plan to set up satellite tobacco auction floors in key tobacco areas in line with Government’s decentralization drive.”
“We are also working on ensuring that adequate foreign currency is secured to import hessian required to meet increased demand.”
Foreign currency shortages have had a negative impact on businesses and TSL hopes to get adequate foreign currency to import both hessian and herbicides.
In terms of commodity production, Matsaira said focus will be on a mix of tobacco, commercial maize, seed maize, wheat and soyas.
“We will however expand our banana production by new plantings on 25 hectares to get to 40 hectares.
“We will also embark on a trial run of horticulture for export markets.”
In the 2017 agricultural season TSL planted 150 hectares of maize at its farm.
“We had 400 hectares under wheat, 300h under soya, and 100 under seed maize.”
In the real estate cluster, plans will be focused on developing the Vorstermans industrial development project.
“First phase of the Vorstermans industrial development project are already at an advanced stage with three new warehouses now in place,” said Matsaira adding that the second phase is expected to commence in the second half of 2018.
