- Revenue grew by 229%
- This was anchored by tobacco related businesses
- TSL handled 51.9 kgs of tobacco, 75% from contracted farmers
Harare- TSL Limited, an agricultural and logistics Group listed on the Zimbabwe Stock Exchange (ZSE), has achieved a strong performance in the third quarter ended 31 July 2023. Both the volumes handled and profitability have experienced significant growth during this period. The success was anchored by the agricultural unit, specifically the contracted tobacco segment.
Driven by robust volume growth, particularly in tobacco-related businesses, revenue surged by 229% from ZWL20.3 billion to ZWL66.8 billion. The US dollar revenue also experienced notable growth, advancing by 47%.
In the tobacco sector, TSF handled an impressive 51.9 million kilograms of tobacco, marking a remarkable 125% increase compared to the previous year's volume of 23.1 million kilograms. It is worth noting that 75% of the total volume came from contracted farmers.
“The strategy to serve the much larger contracted tobacco market is yielding fruit, with 75% of the total volumes handled coming from this segment,” said the Group.
The success of TSL Limited's contracted tobacco operations can be attributed to a combination of factors. Firstly, the company has benefited from a larger national tobacco crop, which has contributed significantly to the surge in volumes. Additionally, TSF's strategic decentralisation of operations and the acquisition of new customers have played pivotal roles in achieving this remarkable growth.
By securing contracts with tobacco growers before the planting season, the Group has ensured a stable and reliable supply of tobacco. This approach offers numerous advantages to both growers and the company. Growers benefit from guaranteed buyers, upfront financing, technical support, and reduced market risks. On the other hand, TSL Limited enjoys a consistent supply of high-quality tobacco, enabling efficient production planning and fostering long-term relationships with contracted growers.
Meanwhile, in the packaging division, Propak hessian volumes increased by 17% compared to the prior year attributed to improved stock availability and a larger tobacco crop size. Tobacco paper volumes surged by 90% as the market responded positively to locally coated paper.
In the logistics operations, the Group introduced a new business model, which supports the customer throughout the value chain. This resulted in an increase in volumes across the logistics’ divisions. Resultantly, tobacco handling volumes were significantly ahead of the prior year due to an increase in the customer base.
“The rail service from both Maputo and Beira has continued to operate and performance in the quarter was satisfactory while clearing and forwarding volumes remained strong due to improved volumes from customers.”
General cargo handling volumes were buoyed by product movements to Zambia via the Beira corridor but demand in the FMCG division was depressed as the formal retail sector struggled against the informal market as a result of a significant exchange rate volatility, inflationary pressures, constrained local and foreign currency liquidity and weakening disposable incomes.
Premier Forklift volumes were 17% ahead of the prior year as the business continued to grow its volumes from both new and existing clients but Avis’ rental days were below prior year due to a decrease in international arrivals in the period.
In real estate operations, “The Group commenced the construction of a new world class 15,000 square meter warehouse at a prime location.”
Voids improved to 7% from 12% in prior year due to improved demand for warehouse space.
In the farming operations, the Group achieved better yields compared to the previous year in tobacco, soya bean, and commercial maize while the new banana plantation began production, resulting in improved volumes.
In the outlook, TSL Limited reiterates its commitment to pursuing key strategic initiatives in alignment with its "moving agriculture" strategy. This strategy underscores the company's focus on driving advancements, efficiency, and growth in the agricultural sector.
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