Ariston enjoys good tea prices
LISTED agricultural concern Ariston Holdings Limited expects to start seeing positive contribution from its pruned tea gardens in later years, recovering from declines experienced in the past financial year.
During the year to September 30, 2023, Ariston embarked on a project to prune its tea gardens which weighed on total volumes.
According to the group, tea volume in the current year declined 34 percent from 3,158 tons to 2,427 tons and this decline was a result of 20 percent of the lowest yielding tea gardens being pruned down for the season as the fertiliser costs would have made these gardens’ viability marginal.
“They will come back into production in later years, at a more vigorous level,” said group chairman Dr Alexander Jongwe.
On a positive note, the group focused on quality enhancement which resulted in improvements in the overall average selling price from US$1,075 per ton to US$1,875 per tonne, representing a 68 percent increase.
Export tea sales volumes improved by 21 percent, with the average selling price improving by 6 percent. Local tea sales volume went down by 6 percent whil3 the average selling price improved by 38 percent largely driven by the dollarisation of the local economy.
In US dollar terms, total tea revenue increased by 29 percent year on year.
Meanwhile, during the start of the year, Ariston made a decision to consolidate tea processing for two of the three tea estates into one tea processing factory. Thus, the green leaf from these two estates was processed in the remaining factory.
Jongwe said the equipment in this factory was upgraded to ensure capacity for the Greenleaf from both Estates and to improve quality and quantity of top export grades.
Coupled with this decision, a solar generating plant was commissioned at the factory in an effort to mitigate against the incessant power outages being experienced.
“This resulted in savings as envisaged, but the savings will be more apparent in future years. Further, it provided predictability to factory processes,” he said.
The solar plant started working from July 2023. Accordingly, the group now operates two tea processing factories compared to three in the prior year.
Jongwe also indicated that the tea production season has already commenced well with harvests being greater than that harvested in the prior comparative period.
In terms of overall performance for the year, the group recorded a loss position of $33 billion from a profit of $5,9 billion in the previous year mainly driven by unrealised exchange losses arising from liabilities denominated in US dollars.
According to the group, a significant change in reporting standards saw the group present its costs of sales before considering fair value changes related to biological assets, resulting in a reported gross loss due to a decline in fair value realised from biological assets.
Despite challenges in the market, the company reported 15 percent increase in revenue, totalling $35,479 billion compared to the prior year. This growth was attributed to a rise in tea prices driven by improvements in quality, offsetting the decline in macadamia nut prices.
Joint ventures played a pivotal role in contributing positively to the group, with a 169 percent increase in the share of profits for the year. However, inflation-adjusted interest expenses surged by 99 percent to $3,2 billion, primarily due to increased borrowings during the reporting period.