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Firmer Tobacco Prices Boost TSL Earnings After Volumes Drop

TSL Limited says group operations during third quarter to July remained profitable despite a decline in volumes thanks to firmer tobacco selling prices.

In its Q3 trading update, group revenue for the quarter was up 61 percent in inflation adjusted terms with Tobacco Sales Floor (TSF) cumulatively handling 23.1 million kgs of tobacco against 24.3 million kgs in the previous year, reflecting a 5 percent decline.

National tobacco volumes closed at 194 million kgs as of 31 July 2022, 3 percent below prior year whilst the national average price at US3.05/kg was 10% ahead of prior year.

The independently grown crop stands at 6%.             

“The strategy to serve the much larger contracted tobacco market is yielding fruit, with 62% of the total volumes handled coming from this segment,” said the group.

Propak hessian volumes were 15 percent below prior year owing to a reduced national crop and a change in the timing of collection of packaging materials by merchants. This gap is expected to narrow in the fourth quarter.

Agricura’s performance for the quarter was mixed as some product lines performed better than the previous year on the back of product availability and competitive pricing, while other product lines were not available as a result of inordinately long lead times as a result of global supply chain disruptions.

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In the farming operations, better yields were achieved compared to the previous year on tobacco, seed maize, soya bean and commercial maize.

The improved water and weather conditions resulted in banana plantation production growing by 50 percent.

The new floor opened in Mvurwi coupled with the provision of handling services to new tobacco clients increased tobacco handling volumes by 31 percent.

General cargo volumes were significantly ahead of prior year due to improved fertilizer volumes. The FMCG business continued to be affected by global supply chain challenges and volumes were depressed.

“The Introduction of a reliable rail service between Harare and Maputo since August 2021 by the company in partnership with DP World and Unitrans continued to increase volumes in the Ports business,” said the group.

Premier Forklift volumes were 5 percent ahead of prior year due to additional business from new clients. Forklift sales also significantly increased in the quarter as more clients resumed capital expenditure which was previously deferred.

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