ZSE-Listed TSL Limited is casting its tobacco handling net wider as it plans to set up a new decentralized auction floor in Mvurwi, Mashonaland Central to improve tobacco volumes despite projections pointing to lower yields this year.
According to the company’s latest trading update for First Quarter ended January 2022, national tobacco volumes are expected to range between 10 and 15 per cent below the prior year, a position shared by the regulator, the Tobacco Industry Marketing Board.
The tobacco marketing season kicks off on the 30th of March 2022 for auction floors and Thursday, the 31st of March for contract floors.
“Tobacco Sales Floor is well advanced in preparation for the tobacco marketing season which will start on 30 March 2022. The business is setting up a new decentralized floor in Mvurwi to augment the Harare, Karoi and Marondera floors. This is expected to improve tobacco volumes to be handled in the year,” the company said.
The country experienced a late onset of the rainy season which negatively impacted the uptake of agricultural inputs.
Whilst a good rainy season had been forecast, the out-turn was erratic, with some parts of the country being negatively impacted by the passage of the Tropical Storm Ana weather system.
The decentralization of tobacco floors has been widely applauded for cutting farmers’ costs and giving impetus to small productive settlements like Mvurwi.
The Mvuri auction floor will augment TSL’s Harare, Karoi and Marondera floors which already exist.
Earlier this year, another tobacco player, Ethical Leaf Tobacco, announced the opening of a new auction floor in Mvurwi.
Meanwhile, TSL’s group revenues in the first quarter were 69 per cent ahead of the comparable period last year. Revenue was mainly from the supply of agro-inputs, provision of logistics services and real estate services primarily to the agriculture industry.
At the group’s packaging subsidiary, Propak Hessian, distribution of tobacco packaging materials commenced during the quarter.
“Volumes of hessian wraps are ahead of the prior year whilst tobacco paper is 16% above the same period last year,” the company said.
A newly acquired, Agricura, volumes across all major product lines were depressed against the prior year due to the late start of the rainy season which resulted in a shift in volume uptake.
At the logistics division, distribution volumes were 49 per cent behind last year as most customers’ volumes slowed down.
“The rail initiative from Maputo to Harare positively impacted volumes in the General Cargo and Ports divisions although shortages of empty containers persisted,” the company said.
