Though it says its operating profits are dominated by Agriflora, its Zambian horticulture export business whose earnings are concentrated in the second half of the year, TZI still managed an eight-fold increase in net profit and an 11-fold increase in net profit.
According to its half-year report for the period to March, sales increased from $3.1 billion to $15.4 billion, more than the $13.8 billion it made during the year ending September. Operating profit increased from $467 million to $3.4 billion while net profit shot up from $259 million to $3.1 billion.
Agriflora had low yields in the first half because of severe water shortages. But the company says it responded quickly to this challenge and completed two dams which quickly filled up. It is therefore now in a better position for future droughts and should expect improved profits from vegetable exports in the three months to the end of December.
Its associate company, Fresca, had a better performance. Though capacity utilisation was only 55 percent, it still managed to generate a net profit of $938 million during its year ending December.
Strategis Africa, whose core business in medical aid/insured health, seems to be doing well in East Africa. Though it runs clinics and hospitals as well as evacuations these are funded from the core business.
Its business model requires 6 000 principal members in a country to break even. It achieved this break-even point in Zimbabwe two years ago and now has 65 000 members who ensure that the business is profitable.
Tanzania is fast picking up. Though it started operations on 1 March this year, it already had 4 000 members. There were already 12 000 members in Kenya which meant the operation was now profitable.
The company says the Zambian and Malawian markets are too small to support the core Strategis business model but they provide useful turnover to the evacuation product and other businesses.
ART was weaned from the group and is now a listed company. TZI is now trying to unlock value in Strategis Africa. It says its trading prospects are no longer tied to the increasingly challenging business environment in Zimbabwe because 90 percent of its assets are outside Zimbabwe. Its largest group asset in Zimbabwe, Fresca, serves the European and American dried vegetable markets.