TEA producer, Tanganda Tea Company Limited, has posted a 25% increase in profit after tax to US$1,97 million in the half year ended March 31, 2024 on the back of reduction in costs and expenses, despite a drop in revenue.
In the comparable period last year, profit was US$1,38 million.
In the period under review, the firm’s finance costs, other expenses and selling and distribution expenses totalled US$3,84 million, down from a prior year comparative of US$4,96 million.
For the reporting period, Tanganda abandoned the local currency and adopted the United States dollar as its accounting currency, joining several other firms who took similar measures owing to the volatile exchange rates.
“Revenue for the half year of US$11,1 million was 6% lower than the prior year of US$11,8 million,” Tanganda chairperson Hebert Nkala said in a statement accompanying the firm’s half year financial results for the period ended March 31, 2024.
In its agriculture segment, Tanganda reported that the late onset of the rains resulted in an 8,96% decline in tea production to 5 082 tonnes in the reporting period from the prior year.
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Bulk tea exports were down by 12% to 3 415 tonnes for the period under review from last year.
Further, the export selling price for bulk tea declined to US$1,38 per kilogramme (kg) in the period under review from US$1,45 over the similar 2023 timeframe.
“Packed tea volumes of 625 tonnes were 33% below 929 tonnes achieved in the prior year,” Nkala said.
“Notwithstanding that the consumer order book was full, a combination of managing customers to reduce defaulting customer risk and packaging supply constraints are among factors that resulted in reduction in sales volumes.”
However, the firm recorded an increase in packed tea and coffee exports of 78% and 32%, respectively.
While Tanganda rakes in significant foreign currency revenue from avocado and macadamia exports, the harvest season only commenced after the reporting period.
Nkala said sustainable market diversification will continue to be pursued to expand the regional and international markets.
“The company is optimistic that it has put in place mitigatory strategies to navigate the difficult terrain. Focus is on improving efficiencies across the company by re-engineering all processes and managing costs,” Nkala said.
In terms of liquidity, the firm had US$1,58 to every dollar of short-term debt showing the firm remained fairly capitalised for the near period.
Total assets were US$39,17 million at the end of the period under review, up from US$31,9 million recorded on September 30, 2023.
The rise was due to increases in inventories and amounts owed to Tanganda by its customers and other parties.