Ariston says, the Covid-19 pandemic disruptions negatively affected its exports leading to a 22 percent drop in tea export volumes during the half year to March 31, 2022.
Presenting the group’s financial performance Ariston chairman, Alexander Jongwe said the group’s export volumes did not perform so well during the interim period due to the effect of the pandemic.
The pandemic negatively impacted both the supply and demand sides of the global economy, hampering firms’ ability to produce as well as customers ability to consume, as nations implemented shutdowns and restricted travel to contain the disease.
“Export tea sales volumes suffered a 22 percent decline to 511 tonnes, while average selling price improved by 8 percent compared to the prior period. There was a slow uptake of export teas in the first quarter of the year due to the effects of the Covid-19 pandemic on shipping logistics and costs,” he said.
The decline is expected to choke the company’s foreign currency revenue generation capacity. Most companies in the country are currently taking advantage of exports to beef up their US dollar earnings.
However, the recent declines in Covid-19 infections the world over, which has seen most countries begin to open up their markets to imports is likely to improve the company’s exports.
During the period, local tea sales volumes went down by 10 percent to 735 tonnes whilst the local tea average selling price increased by 21 percent.
About 36 percent of the projected annual macadamia crop had been produced at the end of the half-year compared to 32 percent in the same prior period. As at half year, macadamia production volumes were 4 percent above the prior comparative period.
Export sales volumes achieved by the half year period were 47 percent ahead of the prior comparative period due to sale of some prior year macadamia stocks at the start of the current year.
This resulted in the reflected sales volume increase compared to the same period last year. Pricing reflected a 16 percent decline against the same period in the prior comparative period. The macadamia kernel prices have not changed much.
“However, the macadamia nut-in-shell prices have been under pressure due to the effects of Covid-19 induced lockdowns in China. This could be a temporary feature, which may reverse once China is back to full production, however until then, we have witnessed a contraction in macadamia nut shell prices,” Jongwe added.
Other products include potatoes, soya beans, seed maize, commercial maize, seed sugar beans, avocado, bananas and poultry. These contributed 27 percent to the revenue compared to 17 percent in the prior period, showing that this category continues to grow and contribute positively to the group’s profitability.
Jongwe on the company’s outlook said, “The group’s activities are cyclical in nature with the majority of harvesting and selling operations occurring in the second half of the year. However, to date, indications are that the group will have higher yields than prior year, a softening in the export price of macadamia nuts but improvement in export tea price.”
The continued effect of the Covid-19 pandemic on the global supply chain coupled with the effect of the war between Russia and Ukraine will have a negative impact on the speed and cost of logistics resulting in increased input costs according to the company.
“So far, the Group has noted the significant increase in cost of fertiliser which is the Group’s most significant single cost,” Jongwe added.