Tanganda says El Niño unlikely to impact business
ZIMBABWE Stock Exchange (ZSE) listed Tanganda Tea Company Limited has said the predicted El Niño weather effects are unlikely to severely impact its operations, avocado and macadamia yields in particular.
The horticultural and beverages products producer remains heavily invested in high technology irrigation strategies, which are expected to diminish the effects of the drought.
In its financial statements for the year ended September 30, 2023, Tanganda chairman, Herbert Nkala said despite the economic challenges in both the local and the regional markets, demand for the company’s products remained positive as the company expects to further diversify its regional operations as part of Tanganda’s growth strategy
He also said the company’s profitability was expected to receive a boost, anchored by the value addition projects in the pipeline and management’s focus on efficient cost management strategies.
“The predicted El Niño is not expected to significantly impact avocado and macadamia yields as the company is invested in dams, reservoirs, and high-technology precision irrigation to mitigate the impact of a drought.
“Yields of avocado and macadamia are expected to increase with enhanced maturity profiling of plantations over the next three to five years,” said Mr Nkala.
“The demand for our products remains relatively strong despite the impact of complex macro-economic factors on the local and regional markets. The growth strategy is to diversify the regional market further.
“The confidence from our customers and their support, including the value addition projects in the pipeline for our plantation crops, will increase profitability mainly as management focuses on efficiency in managing costs.
“The company remains committed to its sustainability agenda with increased activities in environmental stewardship, optimal resource utilisation, out-grower scheme oversight, and community involvement,” he said.
On the company’s financial performance, revenue for the year under review grew by 42 percent in inflation adjusted terms to $128,99 billion as compared to $90,77 billion revenue for the prior year. In historical cost terms, revenue also grew by 678 percent from $7,35 billion to $57,24 billion.,
“The company suffered an inflation-adjusted loss after tax of $17,05 billion compared with a profit after tax of $4,33 billion in the previous year. In historical cost terms, the profit after tax of $15,45 billion grew by 270 percent over $4,17 billion in the previous year,” said Mr Nkala.
However, he also said during the period under review Tanganda’s bulk tea production fell by 9 percent to 7 994 tonnes from 8 670 tonnes produced in the previous season on account of the late onset of the rains and its uneven distribution which also resulted in a 12 percent decline in bulk tea exports compared to the previous financial year.
“The late onset of the rain and its relatively uneven distribution led to a decline in bulk tea production.
“The volume of 7 894 tonnes was 9 percent below 8 670 tonnes produced in the prior season. In turn, following the production trend, bulk tea exports of 6 238 tonnes were 12 percent below the previous year of 7 125 tonnes,” he said.
“As a result of the biennial bearing phenomenon coupled with the impact of the extensive pruning carried out on 55 hectares of mature trees to rejuvenate them, avocado exports of 2 148 tonnes were 50 percent below the prior year of 4 321 tonnes.
“Forty-four additional hectares of avocado plantation were established during the financial year, bringing the total hectarage under avocado to 541 hectares,” he added.
Coffee production for the period under review was 87 tonnes, 28 percent above the 68 tonnes achieved in the prior season while packed tea sales volumes declined by 6 percent to 1 873 tonnes.
“The decline in packed tea sales volumes of 6 percent from 1 994 tonnes achieved in the prior year to 1 873 tonnes sold in this financial year was mainly due to logistical global challenges in sourcing inputs. Plans are in place to clear unfulfilled orders, which will see volumes of our brands growing as we go into the coming year.
“To hedge against local currency inflationary pressures and devaluation, the percentage of domestic sales made in United States Dollars has been pushed up to 70 percent from less than 2 percent in the previous year,” said Mr Nkala.
Tanganda Tea Company remains the largest producer, packer and distributor of tea products in Zimbabwe and distributes to wholesale and retail outlets on both the domestic and regional markets.