DIVERSIFIED agro-industrial concern, Ariston Holdings Limited, has reported a 16% decline in revenue for its first quarter ended December 31, 2024, due to tough trading conditions with the firm now planning massive layoffs.
In a trading update for the period under review, Ariston said the local trading environment has remained challenging as the cost of doing business continued to increase.
This has forced the company to undertake several cost-cutting measures to align its cost with revenue, it said.
“These measures include an extensive staff reduction exercise and further automation of processes where possible,” Ariston said.
The company said the high cost of production for key inputs such as fertilisers, crop chemicals and payroll, coupled with the effects of the 25% Reserve Bank of Zimbabwe export retention had negatively affected operations.
The firm revealed this was all happening at a time when export prices were still constrained.
“In the first quarter of the year, the group focused more of its revenues to the local market to protect the loss of margin arising from the export proceeds retention,” Ariston said.
“The local market remained predominantly United States dollar-based. The Zimbabwe Gold currency has been largely in short supply and has had a disruptive effect on the local trading as its liquidity was constrained.”
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Tea sales volume for the quarter at 388 tonnes was 27% lower than the comparable period’s sales of 530 tonnes.
This was due to a drop in tea production volume to 496 tonnes from 716 tonnes in the comparable period.
The decline was due to extremely hot and dry weather experienced in the first quarter of the year.
Macadamia nut sales volume for the period was 52% lower than the prior comparative period’s 132 tonnes.
“Macadamia harvesting only commences in April. The volume depicted above comprises of early nut drop,” Ariston said.
“Therefore, the lower this early volume is, the better as it means more nuts are still on the trees and are available to reach maturity. Early indications are that the macadamia orchards, so far, have better nut set than the prior comparative period.”
However, other products consisting of bananas, sugar beans and commercial maize saw a volume increase of 32% compared to the prior comparative period, owing mostly to bananas.
“Revenue generated in the current year was 16% lower than that of the prior comparative period,” Ariston said.
“This arose as a result of the delayed onset of rains hence lower production volumes. Only other products had higher revenue than the prior year.”
The firm revealed that there was an early indication that demand for macadamia nuts would be firm with improved prices.
This comes as buyers are approaching the group for macadamia offtake agreements for the season.
Ariston said 660 hectares of row crops were planted in the current year which were expected to produce a good yield.
“The group expects to achieve a higher revenue in the current year on the back of improved production and prices,” it said.
“Expenses will this year carry the cost of re-organising the business for sustainable growth. The group expects that the operating environment will continue to be difficult mainly arising from the tight liquidity conditions being experienced.”
Consequently, the firm will focus on quality, production efficiencies and cost-cutting measures to maximise shareholder value, it said.
