HARARE - Agro-industrial company Ariston Holdings Limited (Ariston) posted a $2,4 million after tax profit in the year to September 2013 spurred largely by rehabilitation of its farming assets.
The positive growth comes as the Zimbabwe Stock Exchange-listed firm had recorded a $531 648 loss in prior year period as a result of control deficiencies at its trading division.
This is despite an increase in the cost of funding of $1,6 million in the period under review compared to $803 113 in 2012.
“The group is moving closer to the time when all the operations will start yielding sustained returns as the rehabilitated assets start to become more productive from 2014,” said Ariston’s chairman Robbie Mupawose.
He added that despite a rather gloomy picture as a result of cash flow constraints, he was impressed that the group performed well under the prevailing circumstances and had much potential going forward.
Overall group revenue went up by 15 percent to $17 million from $14,8 million registered in prior year period.
“The group registered an operating loss of $2,7 million before a net fair value adjustment of $8,3 million of which $3,9 million is short term crops (consumables) which we expect to convert to cash in the next financial year,” said Mupawose.
He noted that this led to a profit before tax and interest of $5,7 million while finance costs were up by 96 percent in line with increased borrowings of $11,6 million.
“Farming operations have continued to improve and are increasingly profitable. However, the performance of trading operations remains below anticipated levels,” he said.
Macadamia nuts volumes rose this season to another record crop at 1 176 tonnes from 843 tonnes in 2012 buoyed by firming prices as a result of improved quality.
Blended tea sales increased from 673 tonnes recorded last year to 846 tonnes for the period under review.
In the horticulture business, overall orchard yields were in line with expectations as 46 hectares of new orchards were planted while sub-economic orchards were removed.
Despite a late start to the season and a prolonged drought key summer crops such as maize and soya grew largely according to expectation.
Mupawose noted that the group’s trading division FAVCO is being restructured.
“A revised business model will make best use of the much increased farm output in the year ahead,” he said.
In the group’s outlook, Mupawose said that working capital for the first half of next year will at best be adequate while capital projects have been curtailed thus the second half of the year will see some relief to cash constraints.
“Overall production is expected to pass the break even stage this season for all operations with considerable upside still in reserve for future years,” he said, adding that “some capital projects completed this year will produce immediate results while others will continue adding to output in the years ahead.”
Ariston is an agro-industrial company operating five estates totalling 7 864 hectares of land of which 3 797 ha is arable, growing a wide variety of agricultural produce as well as supplying supermarkets with local and imported produce through its distribution company, FAVCO.
The estates include Southdown and Clearwater in Chipinge, growing tea and macadamia nuts, Roscommon in Chimanimani which grows tea, macadamia nuts and bananas, Kent in Norton which also produces poultry, livestock and vegetables; and Claremont in Nyanga, the largest producer of rainbow trout in Zimbabwe.