Lovemore Kadzura
Business Reporter
THE El Nino-induced drought has weighed down on agricultural concern, Ariston Holdings, as rain deficit experienced at its estates across the country seriously affected production levels, the group’s first half year results show.
Presenting the financial results, board chairman, Mr Alexander Jongwe, said despite the low rainfall, the company has invested in macadamia operations by acquiring a scanning machine that will enable them to efficiently grade the nuts before exports to fetch better prices.
Ariston is a diversified agro-industrial company that has vast business interests spanning a variety of products that include tea, macadamia, row crops and poultry.
It has three estates in Manicaland— namely Clearwater, Roscommon and Southdown as well as Kent Estate in Norton.
“El Nino-induced climatic conditions were experienced at all estates, although to varying degrees. Year to date rainfall for the Chipinge located estates was 19 percent below prior year, and one percent below prior for Chimanimani. On the other hand, Norton’s rainfall was severely affected at 21 percent below the prior comparative period, coupled with poor distribution characterised by a significant hot period of no rain.
“The group had mitigatory measures in place to ensure that production volumes would not be severely affected. Challenges continued to be presented by the economic environment, both local and external. These were characterised locally by increasing local input costs due to inflationary pressure, liquidity challenges slowing down the working capital chain, and this was compounded by a difficult external market.
“At the beginning of the financial year, the group noted that its functional currency had changed to the United States dollars. It is on this basis that the financial results for the current period have been prepared and presented in USD.
“Revenue of US$2, 427, 642 generated during the first half of the year was seven percent below the comparative period. This was initially attributable to a decline in export tea volumes. The decline in revenue posted, coupled with the 27 percent increase in the cost of production resulted in the group gross loss during the period.
“During the period, 1 830 tonnes of tea were produced. This was a 14 percent improvement on the prior comparative period’s volume of 1 599 tonnes.
“A six percent improvement in the average selling price of export tea was noted, however, this was coupled by suppressed export tea demand which resulted in export tea declining by 56 percent. This resulted in a 52 percent decline in export revenue,” said Mr Jongwe in his statement.
Mr Jongwe said the firm saw an increase in local tea demand, while macadamia production levels declined by four percent.
“Local tea demand remained firm as evidenced by a 40 percent increase in local tea sales volumes compared to the comparative period. Macadamia production volumes for the period at 603 tonnes were four percent below the prior comparative period. During the current period, 386 tonnes of macadamia nuts were sold, but all these nuts related to the stocks held at the start of the current year. No current season macadamia nuts had been sold as at March 31, 2024.
“In response to the dry spell, other products such as potatoes were not grown in the current period in order to preserve the dam water for the commercial row crops that were planted under irrigation. This resulted in a decline in revenue generated from other products. The three joint ventures namely, Bonemarrow Investments trading as Claremont Power Station, Claremont Orchards Holdings and Mombe Shoma Pvt Ltd contributed positively to the group’s performance.
“During the period, the group acquired a macadamia scanning machine, which allows for the scanning of nut-in-shell nuts to determine their quality before export. This will determine the group to determine nut quality and defects and assist in pricing the macadamia nuts more effectively for export being able to grade better and guarantee the quality being sold,” said Mr Jongwe.
