Ariston Holdings warns of tough times ahead due to...

Ariston Holdings warns of tough times ahead due to liquidity crisis

Nyashadzashe Ndoro

Chief Reporter

Ariston Holdings Limited has sounded the alarm on the deteriorating operating environment in Zimbabwe, cautioning that tight liquidity conditions will continue to pose significant challenges, even as the company reported a mixed performance for the third quarter ended June 30, 2024, with notable gains in tea production and macadamia sales volumes.

According to the update, the company faced challenges due to El Nino-induced climatic conditions, lower rainfall, and a predominantly dollar-based local trading environment.

Despite these challenges, Ariston Holdings reported a significant improvement in tea production, with a 28% increase in volume compared to the prior year. Macadamia production was 2% lower than the previous year, while poultry production was affected by a temporary halt in production due to the installation of a new abattoir.

The group's financial performance showed a 0.5% increase in revenue, driven by improved macadamia volumes and selling prices. However, revenue from other products was lower than the previous year.

Ariston Holdings says it has implemented cost containment measures, including the installation of a solar energy plant at Southdown Estate, which has achieved cost savings and reduced reliance on generators. The company has also invested in a new X-ray machine to enhance product quality and selling price determination.

Looking ahead, the company expects the operating environment to remain challenging due to tight liquidity conditions.

"The Group expects that the operating environment will continue to be difficult mainly arising from the tight liquidity conditions being experienced. As a result, focus will remain cost containment measures, improvement of product quality and production processes," the company said.

In the Mid-Term 2024 Fiscal Policy announced by Finance Minister Mthuli Ncube last week, a comprehensive plan is outlined to stabilise the newly introduced Zimbabwe Gold, a domestic currency backed by the country's precious metal and foreign exchange reserves.

The half-year fiscal policy review introduces a new requirement for presumptive tax payments to be made in local currency, irrespective of the currency used for business transactions.

Additionally, businesses that derive more than 50% of their revenue in foreign currency will be required to settle their tax obligations using a 50/50 split between ZiG and foreign exchange.