Ariston discontinues FAVCO as it slips to US$1,7 million loss

Ariston discontinues FAVCO as it slips to US$1,7 million loss

Clearwater, Roscommon and Southdown Estates, combined, make Ariston the third largest tea producer in Zimbabwe

ARISTON Holdings revenue in the year ended 30 September 2015 declined six percent to US$11,8 million from US$12,5 million in 2014 owing to a mixed performance across its units.

Group Chair Robbie Mupawose, in a statement accompanying the results, said strong performance from macadamia and deciduous fruits are the only positive results from recent investments while short term crops have been a disappointment in the year.

Mupawose said as a result of continued losses, the company discontinued FAVCO operations in June and that decision combined with the movement of tea distribution to brands Africa will improve the group’s viability and allow focus on farming operations.

However, during the year, operating losses continue to go down and reduced by US$3,2 mln on prior year to US$0,3 million in 2015.

After tax profit loss position of US$1,7 million was attained in the year compared to a profit of US$1,5 million in 2014.
Mupawose said discontinued operations incurred a loss of US$3,4 million due to the poor results of the trading division and the costs of unwinding of the business.

In terms of operations, Macadamia volumes increased to record yield of 1,385 tonnes compared to 1,105 tonnes in prior year. Mupawose said there is still room for improvement on quality and yield while benefits of investment in irrigation will increase in the seasons ahead.

“Considerable work has been carried out on rehabilitating orchards in addition to a modest expansion in the planted area.”

He said indications are that prices will remain high and approximately half of next season’s crop has been sold forward at favorable prices.

Tea production saw sales of blended teas volumes at 740 tonnes compared to 750 tonnes in the prior year. Distribution of blended teas was transferred to Brands Africa in April 2015 from FAVCO.

In horticulture, Stone fruit sales volumes increased to 340 tonnes compared to 143 tonnes in prior year and this was largely due to the new clingstone peach plantings.

Mupawose said further growth in production is expected in next year and the encouraging results have resulted in an additional planting of 6 hectares of stone fruit.

Poorly distributed rainfall affected summer crops which saw Kent performing poorly in the year. Poultry sales reached 1, 038 mln in 2014 though marginally lower on prior year.

In terms of business units’ financial performance, Southdown Estates contributed 76% of group revenue ta $9 mln. Its operating profit was $2.2 mln compared to $0.045 mln loss in prior year.

Kent Estate recorded a 52% decline in revenue at $1.1 mln compared to $2.3 mln in prior year and the decline in revenue resulted in a $0.4 mln increase in operating losses to $1.1 mln.

Claremont Estates revenue for the year was $2 mln which was an improvement of 16% on prior year. The group says the increased yields for pome and stone fruit were the major factor in the operating loss reducing from $0.9 mln in 2014 to $0.3 mln in 2015.

Meanwhile, the group says working capital will again be at premium for the first half of the season.FinX

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