Industrial holdings group, TSL Limited, expects to bump profitability in the current financial year on the back of a positive outlook for Zimbabwe’s agriculture sector, mainly the tobacco sub-sector.
Tobacco has already hit the 200 million kg mark, surpassing last year’s 189 million kilogrammes as farmers continue to deliver the product to the market.
TSL group chief executive officer Pat Devenish said the future of tobacco is bright and the company will continue to position itself to capitalise on that.
“Small scale farmers have been making significant contributions in tobacco farming and we do not see them stopping production or reducing it at all. The future of tobacco is well assured and bright,” he said.
The firm’s tobacco related business is expected to benefit from an increased market share of the national tobacco crop.
Its auction floors, TSF, has maintained its dominant position in the auctioning of independent crop with a total market share holding of over 60 percent.
However, the late start to the tobacco selling season affected volumes of the hessian business in the half year to April 30, 2018.
Hessain bags are used to wrap tobacco.
Agricultural trading Agricura’s revenue and profitability were above same period last year while farming operations remains on course to have a more profitable year.
The company grew its first pea crop — as a trial — and sales have since commenced.
While harvesting of soya bean crop delayed, management indicated it would contribute to second half profitability, further boosting earnings for the unit and the entire group.
Revenue from the agriculture division for the six months grew 9 percent to US$14,2 million while its profit grew 64 percent to US$2,8 million on improved tobacco quality and yield.
Overall, the group’s first half financials have been positive.
Revenue for the period under review grew 4 percent to US$24,6 million. At US3,5 million, operating profit was 27 percent above same period last year.
Profit for the period jumped 517 percent to $9,7 million compared to $$1,5 million in the comparable prior year period.
During the period under review, TSL disposed of its entire 16,53 percent stake in Nampak Zimbabwe Limited at a profit of $7,7 million.
As at half year, $4,8 million of the proceeds had been distributed as a special dividend to shareholders while $10 million was earmarked for capital projects in the second half of the year.
Net asset value per share increased by 8 percent to 22,1 cents while the group’s current ratio improved 76 percent to 2,7 driven by funds from the disposal of its investment in Nampak.
Gearing was reduced to 12 percent from 15 percent as the group watchfully controlled its financial commitments.
The logistics division had an improved first half year performance but foreign currency challenges affected the business. Its revenue remained flat at US$6,9 million.
The vehicle rental company — Avis- remained profitable on cost containment in line with the business volumes.
The real estate division registered marginal improvements on increased demand driven by larger tobacco crop.
Despite the challenging operating environment, management remains optimistic and will position business accordingly.
Availability of foreign currency also remains critical for business.
The tobacco sub-sector is the country’s game changer as the largest foreign currency earner and a source of employment for hundreds of thousands for Zimbabweans through backward and forward linkages.
President Mnangagwa is on record saying future economic development will be anchored by the agriculture and mining sectors.
According to The Reserve Bank of Zimbabwe, foreign currency generated by the tobacco sector is enough to import fuel to keep the country going for 12 months.
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