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High costs hold back Ariston


Zimbabwe Stock Exchange (ZSE)-listed agro-industrial company Ariston Holdings has reported a $19,8 million comprehensive loss for the year ended September 30, 2021, despite enjoying volume growth on tea, macadamia.

The firm said the loss was mostly caused by rising operating expenses.

It is the latest firm to raise the red flag over rising costs in Zimbabwe, where many utility costs have surged in the past year.

Foreign currency shortages have been the driving force behind most cost increases.

In its audited financial statements for the year, Ariston said operating expenses grew to $559,2 million in the year under review, from $324,2 million the previous year.

The firm said production costs also rose to $551,4 million, up from $424,5 million during the comparable period last year.

The company also took a knock of $233,3 million on fair value adjustments.

“During the period, the group disposed of 50% of its shareholding in Claremont Orchards Holdings (Private Limited for US$2 million, which was equivalent to ZWL170,846,800) to Tuinbouw Zonder Grenzen, a company registered in the Netherlands. Part of the rationale for the transaction was to raise funding for further investment into macadamia nut orchards in Chipinge and Chimanimani,” the firm said.

“Further, the transaction enabled the entry of a foreign shareholder who has undertaken to provide significant funding for expansion of Claremont orchards into high value fruit and flower offerings primarily for the export market. It is envisaged that the sum of the two investments will provide Ariston shareholders with greater value than current. Regulatory approval for the transaction has been received and the sale proceeds were received shortly after year-end,” said Ariston in the results statement.

Group revenue closed the year at $1,2 billion, a growth of 31% when compared to prior year.

In terms of operations, Ariston said current year tea production volume improved by 6% due to wetter and cooler weather conditions experienced during the period under review, compared to during the same period in the prior year.

“Production volume recovered to 2,748 tonnes compared to 2,582 tonnes produced in the prior comparative period. Shortage of harvesting labour led to loss of approximately 300 tonnes of tea not being harvested in the current year,” the company said.

On macadamia, the company said production volume improved by 27% from prior year’s 1 063 tonnes to 1 292 tonnes in the current year.

“Average selling prices for exports declined by 7,5%. While the average selling price for large nuts remained the same as in the prior period, the price for the small nuts and lower quality nuts came under pressure, thereby weighing down on average selling prices,” Ariston said.

The company said its fruit category’s production volumes of 3 195 tonnes for the current year improved by 17% from 2 729 tonnes produced in the prior comparative period and yields from young orchards continued to improve.

Other products -making up 21% of revenue comprise potatoes, soya beans, seed maize, commercial maize, seed sugar beans, avocado, bananas and poultry- have been growing steadily over the years, Ariston added.

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