TSL Limited performance depressed
REDUCED volumes at tobacco auction floors and at other business units saw TSL Limited report a 16 percent drop in inflation adjusted revenue for the full year to October 2020.
Revenue for the period amounted to $2.2 billion down from $2.6 billion prior year comparative. This, the company attributed to the decrease in the national tobacco crop. The group has several business units that are dependent on national tobacco produce.
Although profit for the year was also down to $378,384,900 from $709,195,406 prior year, the Group still managed to pay a final dividend of $0.28 cents per share.
The 2019/20 agricultural season was hit by drought and this saw national tobacco volumes fall 29 percent to 183million kgs.
TSL’s Tobacco Sales Floor also seems to have lost market share as the fall in its volumes was bigger than the fall of the national tobacco crop.
In a statement accompanying the results, management said independent auction volumes at Tobacco Sales Floor at 6.69 million kgs were 69 percent was below prior year owing to the smaller tobacco crop and auction floors not receiving the requisite approvals to decentralise.
TSF however, still holds the largest market share in this segment and has the highest seasonal average price.
Contracted volumes handled for tobacco merchants at 8.46 million kgs were also 42 percent below the same period last year.
Volumes at Propak Hessian were down 24 percent due to the decline in national tobacco crop and reduced volumes through the independent auction market.
Tobacco handling volumes were 9 percent behind prior year due to the later start of the tobacco selling season and delays in tobacco processing.
Other units such as the ports business, forklifts and freight forwarding also faced volume decline.
Volumes in the ports business decreased by 51 percent due to generally slower movement of both imports and exports owing to the Covid-19 pandemic.
Handling volumes at Premier Forklifts were 23 percent below prior year due to the delayed start of tobacco processing. Meanwhile, forklift sales were also depressed as most customers held back on capital projects under lockdown.
Volumes in the freight forwarding and customs clearing business were depressed as imports by the customer base remained subdued.
Avis’ rental days were 54 percent below prior year as the business was significantly affected by the ban on both local and international travel during the year as a result of the global pandemic.
It was however not gloom and doom for the Group as some units fared better.
Agricultural trading Agricura was one of those that fared better as it recorded volume growth across major product lines, largely attributable to product availability and more attractive pricing on locally manufactured products.
Although drought impacted the uptake of agro chemicals in general, Agricura saw an increase in market share.
Management said the business had invested in enhancing its manufacturing capabilities in partnership with international players.
“This has allowed for a strategic shift in the current year from over-reliance on imported finished product to more locally produced chemicals under license,” Management said.
While other units were struggling with falling volumes, at Agricura volumes were growing steadily with the business being able to better meet demand for animal health remedies in the current period.
Another unit that performed positively was the farming operations that recorded satisfactory yields across its major summer crops — tobacco, maize, soya and chillies which were largely grown under irrigation.
In the real estate business, rental yields were enhanced to 7.8 percent from 5 percent in prior year.
However, voids increased to 12 percent due to the lower tobacco crop.
TSL expects the second wave of the COVID19 global pandemic which has resulted in renewed lockdown to impact the Group’s operations going forward.
The Group, however, is still exploring opportunities to expand its operations locally and regionally; organically and through strategic acquisitions.
In the coming year, the Group will also undertake a pilot project with its partners and Government in the introduction of a commodities exchange for primary agricultural produce.