daniel chigunwe
Michael Tome
Business Writer
TANGANDA Tea Company Limited says its export sales grew 39 percent to US$15,1 million in the fiscal year ending September 2024 contributing 59 percent to the group’s total revenue.
In contrast, the company experienced a 16,5 percent decline in local sales to US$10,6 million.
The surge in export sales was primarily attributed to a substantial increase in avocado export volumes.
As the restrictions imposed by the Covid-19 pandemic eased, the company benefited from both a recovery in selling prices and an upswing in demand.
Specifically, avocado exports grew significantly, climbing 40 percent to reach 2,9 tonnes, compared to 2,1 tonnes in the previous year.
This rise was bolstered by an increase in average selling prices, which improved to US75 cents per kilogramme, up from US44 cents in the past year, reflecting the global market’s improved conditions following the easing of pandemic-related restrictions.
However, not all product categories shared this positive trajectory.
Macadamia nut exports faced challenges, experiencing a decline of 3 percent, dropping to 1,50 tonnes from 1,55 tonnes the previous year.
This downturn was largely due to logistical complications stemming from rescheduled shipping, which adversely affected the final consignment of 286 tonnes.
Similarly, bulk tea exports also saw a slight decrease, falling 2 percent to 6,1 tonnes from 6,2 tonnes in the prior year.
The drop in tea export volumes was linked to a decline in tea quality, which was negatively impacted by extreme temperature conditions experienced throughout the year.
Additionally, the prevailing market conditions in Kenya significantly affected the tea export average selling prices.
They decreased from US$1,44 per kilogramme in the prior year to US$1,34 per kilogramme in the current fiscal year, further worsening the challenges faced by Tanganda.
“Revenue for the year of US$25,7 million grew by 9 percent from the prior year of US$23,6 million primarily attributable to an increase in avocado export volumes and the recovery of their selling prices as Covid-19 pandemic restrictions eased,” said Herbert Nkala, Tanganda Tea Company Limited chairperson in the full year financial review to September 30, 2024.
Nkala highlighted that these developments occurred against a backdrop of economic instability characterised by exchange rate fluctuations, depreciation of the local currency, and persistent inflationary pressures.
After the introduction of a new local currency on April 5, 2024, the economy witnessed a resurgence of these challenges, culminating in a 43 percent devaluation of the ZiG currency in September 2024.
This devaluation contributed to a further weakening of market confidence in the local currency.
Despite the Government’s implementation of tight fiscal and monetary policies aimed at stabilising the economy, currency stability continues to be threatened by ongoing structural economic challenges, further undermining market confidence.
The situation was further compounded by the El Niño which adversely impacted the agricultural sector and coincided with a period of subdued international commodity prices, thus significantly affecting overall economic performance.
Moreover, the drought conditions induced by El Niño adversely affected national hydro-power generation, leading to enduring power shortages.
This situation forced businesses, including Tanganda, to resort to costly alternative power sources to maintain operations.
Nevertheless, the company has made strides to address its power supply challenges by investing in solar energy systems at three of its five estates.
According to Tanganda, the implementation of grid tying and net metering strategies is ongoing, allowing the company to utilise excess power generated from its solar plants, which ultimately aims to lower electricity costs.
By navigating these mixed challenges, Tanganda managed to achieve a profit after tax of US$1,4 million, a turnaround from a loss of US$3,1 million reported in the previous year.
The company’s total revenue for the year reached US$25,7 million, reflecting a nine percent increase from the prior year’s US$23,6 million.
Operating profit also saw a significant increase, soaring by 223 percent to US$1,9 million.
Looking ahead, Tanganda indicated that it anticipates a persistently complex operating environment, primarily influenced by adverse currency fluctuations and inflationary trends, compounded by the ongoing impacts of El Niño and persistent power crises.
Bongani Ndlovu