The graph below shows that Tanganda remained profitable despite a decrease in volumes in %

Harare- ZSE-listed tea agro concern, Tanganda Tea Company has posted a net profit growth of ZWL1.4 billion from ZWL1.1 billion for the half-year ended 31 March 2023 despite incurring a volumes decline due to climatic related effects, effects which developed at global scale, local currency instability and failure of the national power grid.

Revenue for the company increased to ZWL10.9 billion from ZWL6.4 billion, a 70% spike in a volatile economic environment infested by currency instability, climatic effects and prolonged load-shedding. 

“The first half of the Financial Year was volatile characterised by currency instability which increased upward inflationary pressures due to the adverse impact from the pass-through effect of exchange rate depreciation,” said the Company’s chairperson Herbert Nkala.

“Notwithstanding the operating environment challenges, the Company remains focused on its strategic value addition thrust and cost management to mitigate pressures on profit margins,” said Nkala.

Operating profit surged to ZWL3.8 billion from ZWL3 billion, notching a significant 26% increase. Profit attributable to owners increased by 24% while net asset value closed the six months 6% up. 

The resilient performance came on the back of reduced bulk tea production which fell to 5 582 tonnes due to the late onset of the rainy season exhibiting a 6% lower than the prior year’s production of 5 935 tonnes. 

Following the production trend, bulk tea exports went down by 9% to 3 415 tonnes from 3 747 tonnes during the same half-year period in 2022. This resulted in packed tea sales volumes decreasing by 7% to 929 tonnes from 993 tonnes during the comparative half-year period. 

The Company increased the value of its current assets to ZWL16 billion from ZWL11 billion while current liabilities remained lagging at ZWL8 billion, despite doubling from ZWL4 billion during the same period last year.  

Tanganda Tea Company was able to record a profit despite a decline in production and high costs due to several factors. Firstly, the company was able to increase its revenue by 70%, indicating that it was able to sell its products at higher prices despite a decrease in its sales volume for its packed tea products which helped offset the decline in bulk tea production and exports.  However, it is key to note that these increases were due to exchange rate movements and inflation trends.

Additionally, the firming of the average selling price to US$1.45 per kg from the prior year's average selling price of US$1.43 per kg helped the company spread its costs.

The company's ability to maintain or increase its profit margin per unit sold despite lower volumes is another factor that contributed to its profitability. This suggests that the company was able to optimise its cost structure, reduce its production costs, and increase its prices to maintain its profit margin per unit sold.

Furthermore, the global tea market is expected to grow at a compound annual growth rate of 6.2% from 2023 to 2028, which suggests that there is a long-term demand for tea products. This trend had contributed to Tanganda's profitability, as it is a well-established player in the tea industry, and has a strong market position with a loyal customer base.

Tanganda is the largest tea producer in Zimbabwe. It also boasts a good reputational in regional and global markets. The Company is organised into 2 operating segments, beverages and agriculture –

 The agriculture division is based in the Chipinge district and consists of five estates inter-cropped with tea, coffee, avocados and macadamia nuts. Tea and coffee are processed in bulk form for sale, either on the international market or to the Beverage Division for local and regional packed tea sales. 

The beverages division consists of a tea blending and packaging plant, as well as a distribution warehouse in Mutare. Packed tea from this factory is sold and distributed through distribution depots in Harare, Bulawayo, Gweru, and Mutare. Depots handle products in a first in the first out method. Packed tea is also exported to various regional markets. Major company brands include Tanganda, Stella, Silver, Joko, Tanganda Special Blend, Tanganda Tips, Fresh Leaves, Tanganda Healthi Green, Nella Rooibos bags and Natra Fresh Rooibos (leaf and bags), Resurrection, Rosella, Makoni, and High Country Coffee. 

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