BY Jabulani Khumalo
The Tobacco Sales Limited (TSL) said the operating environment in the country remains hyperinflationary.
In statement the company’s Chairman Anthony Mandiwanza said widely reported backlogs on the foreign currency auction have resulted in cash flow strain for both foreign and local currency for most businesses.
Mandiwanza said the persistent global supply chain disruptions and attendant costs were worsened during the period by the Russia/ Ukraine war resulting in the unavailability, or where available, exorbitant costs of raw materials, fertilizers, and some agricultural commodities such as wheat.
“The outturn of the 2021/22 rainy season was erratic with some areas experiencing delayed rains and prolonged dry spells after crops had been planted, whilst other areas experienced hailstorms resulting in the largest hail insurance payouts for the tobacco industry in many years.
“National maize volumes are forecast to be well below initial expectations.
The tobacco marketing season commenced on 30 March 2022, and after a month of sales, indications are that national tobacco volumes will be between 10% – 15% lower than the initial forecasts and the 211 million kgs purchased in the previous year.”
“Pricing of the tobacco crop to date, has been firmer than in prior year as significant o -taker nations replenish their inventories and production volumes from South Africa are lower than anticipated.
The company’s abridged statement of comprehensive income shows that the in April 2021 the company made show 9 million dollars profit throughout its six months report and this year it reported 7million showing a 20% decrease in profit as compared to last year.
“Revenue at ZWL$3 billion is 5% above prior year and inflation adjusted profit before tax for the period is 4% below comparative period.
“The impact of the real increases in operating costs owing to the operating environment cannot be ignored, however, the Group continues to take stringent measures to contain costs through investment in technology, manufacturing and exploiting operational efficiencies. As of 30 April 2022, the tobacco marketing season had run for one month, and the peak of the season is expected in the Group’s third quarter.”
“The Group’s financial position remains solid. Local borrowings have been increased during the period to fund strategic initiatives. Interest cover remains adequate. Positive cash flows were generated from operations in the period and reinvested in the business and used to pay dividends to shareholders.”
“The Group, supported by its customer base, has been able to restock agricultural chemicals at Agricura and hessian wraps at Propak, purchase productive assets across the business units and construct a new 9,000 square metre warehouse in Mvurwi for expanding the tobacco contract management business in line with the Group’s decentralization drive.”