Ariston faces management shake-up


HARARE – A management shake-up is looming at struggling agricultural concern, Ariston Holdings, as the company has failed to register any profits in the past nine years, analysts have warned.

“After a string of loss-making years, Ariston is under pressure to deliver and 2018 has to be the year otherwise some management changes will have to immediately be expedited. This is a company which has lost sense to how it feels making a profit, having reported perennial losses since 2009,” investment advisory firm Equity Axis said.

The Zimbabwe Stock Exchange-listed company’s revenue for the year ending September 30, 2017 rose 19 percent to $11 million on the back of increased volumes across board.

Gross margins for the year improved to 31 percent from 18 percent in the prior year, while operating expenses declined to $4,3 million, from $4,4 resulting in a two percent saving.

Despite the improved performance, Ariston remains in the red after recording a $1, 761 million loss for the year from a loss of $2,376 million that was incurred in the prior year.

Equity indicated that Ariston’s current revenue levels are near the 2010 outturn and below the 2011 to 2015 levels despite the injection of fresh capital into the agro firm by a new shareholder in 2012.

“Perhaps the economics of Zimbabwe has not been very favourable with the agriculture sector recording a slowdown in growth over the period mainly to unfavourable rains.

“An industry analysis shows that the other notable peers such as Tanganda, which is controlled by Meikles, in the same vein buckled under losses over the same period even recording drastic revenue declines,” Equity said.

However, Tanganda has turned the corner after it reported improved revenue and a positive operating profit in the six months to September 2017.

Generally both companies have high exposure to tea, coffee, macadamia and avocados within their portfolios and these commodities have been registering firm prices on the international markets.

“This, together with a more favourable rainfall outlook, should inspire better performance from Ariston going forward,” the equities research firm said.

Ariston chairperson Alex Jongwe conceded that while the group’s performance has significantly improved compared to prior years, stringent cash-flow management continues to be imperative as the company deals with legacy liabilities.

“The group is in a better financial position than prior year which should propel it to an improved financial performance.

“Production volumes are expected to surpass the 2017 levels. Early production volumes of tea are showing that current harvest is approximately 40 percent ahead of prior year for the same comparative period,” he said.

Jongwe indicated that Ariston’s macadamia crop on the trees is good and production quantity is expected to be in line with that of the current year.

However, due to the heavy pruning undertaken, quality and therefore pricing is expected to improve further, he said.

“Pome fruit and stone fruit have once again shown significant improvement on 2017 production. Marketing activities have been greatly enhanced so as to improve on the weighted average selling price.

“The first exports of stone fruit were undertaken subsequent to year-end. Further export markets for our fruit will be established in order to enhance their financial contribution to the group,” Jongwe added.

The young Pome fruit orchards are now in their third year of production.

“Production volumes are thus expected to be significantly higher than 2017. As previously stated the Pome fruit orchards have the potential to double  yields over the next few years as the orchards mature.

“Early indications on pricing are showing that the prices will remain firm on tea and macadamia which are our significant revenue contributors,” he said.


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