Tanganda bemoans late onset of rains
TANGANDA Tea Company says the late onset of the rainy season adversely impacted bulk tea production, resulting in a 19 percent decline in volumes to 1 986 metric tonnes in the quarter to December 31, 2023, compared to 2 443 metric tonnes produced in the prior year.
In a trading update, the company said that despite the decline in production, bulk tea export volumes grew by 18 percent to 1 274 tonnes from 1 076 tonnes achieved in the previous year, owing to improved logistical arrangements for more export shipments to be processed before the Christmas break.
The trading update revealed that packed tea sales volumes of 475 tonnes were 14 percent below the 549 tonnes achieved in the prior year.
“Notwithstanding that the customer order book is full, a combination of packaging supply constraints, power outages, and managing customers to reduce defaulting customers’ risk are among the factors that resulted in a reduction in sales volumes.
“Subsequently, volumes have started to increase as constraining factors have eased and the cumulative variance has begun to narrow,” reads the statement.
During the period under review, packaged tea exports into the region grew by 100 percent in response to the company pursuing and supplying an opportunity that arose to penetrate the Democratic Republic of the Congo.
The company said sustainable market diversification will continue to be pursued to expand the regional market.
It was noted that avocado and macadamia plantations that are under precision irrigation are looking healthy, and the harvesting of these crops will commence towards the end of the second quarter of the financial year.
In terms of financial performance, the company's revenue for the quarter under review of US$5 million was 9 percent below US$5,9 million achieved in the prior year.
Looking ahead, Tanganda said the operating environment is expected to remain volatile and complex due to continued inflationary pressures, currency instability, the escalation of costs, and reduced consumer disposable incomes.
It was noted that businesses welcomed the extension of the multi-currency regime to 2030, as this is expected to facilitate some stability within the economy.
“The demand for our products remains relatively strong despite the impact of complex macro-economic factors on the local and regional markets.
“Implementation of diversification of regional markets for packed teas as a growth strategy has begun to yield positive results.
“The confidence from our customers and their support, including the value addition projects in the pipeline for our plantation crops, will help in improving company profitability,” reads the update.
The company highlighted that management will continue to focus on improving efficiencies across the company by re-engineering all processes, including purchasing, staffing, process flows, agronomic practices, selling, distribution, and internal controls.