TSL Limited has commended the impact of contracted tobacco farmers saying the strategy is yielding fruit on the back of an overall satisfactory performance across the group’s units.
Presenting the group’s performance for the year ended October 31 2023, TSL Limited board chairperson, Anthony Mandiwanza said the contract farmers’ input was impressive over the period.
“The strategy to serve the much larger contracted tobacco market is yielding fruit, with 75% of the total volumes handled coming from this segment.
“These positive results are, in large measure, attributable to a larger national tobacco crop, successful decentralisation of operations and the acquisition of new customers. TSF continued to hold the largest market share in the independent auction segment (65%),” he said.
During the period, the tobacco Sales Floor cumulatively handled 51,9 million kgs of tobacco – a 125% increase on the prior year’s 23.1 million kgs.
The firm said the 2022/23 summer cropping season was reasonable across most of the country, with adequate rains. National tobacco volumes closed at 296 million kgs, 43% ahead of the prior year and the national average tobacco price at US$3.03/kg, 1% below the prior year price of US$3.06/kg.
The independently grown tobacco crop closed at 7% of the national crop.
Notwithstanding the challenging trading conditions, the Group achieved good volume growth across most business units against the prior year. Inflation-adjusted revenue was up 159% underpinned by strong volume performance, particularly in the tobacco-related businesses.
Operating profit before fair value adjustments was 89% above the prior year. The ZWL$ cost structure of the business was inflated due to exchange rate volatility whilst foreign currency revenues were recorded at the official exchange rate.
Local currency borrowings which had unsustainably high interest rates were paid off early in the year resulting in a reduction in finance costs by 50% compared to the prior year.
Going forward, the group plans to pursue key strategic initiatives in line with its “moving agriculture” strategy. Several investments are lined up to scale up manufacturing, expand the capacity of the different business units, and improve efficiencies to deliver a superior offering to the marketplace across the agriculture and mining value chains.
“The Group’s digitalization drive continues to bear much fruit with more digital investments earmarked for the upcoming year. The operating environment is expected to remain challenging and will be proactively managed to ensure continued shareholder value creation and preservation,” added Mandiwanza.