LISTED concern TSL is targeting 2,5 million kgs in its tobacco grower scheme as the group seeks to improve service position to customers by following the value chain.
Chief executive Washington Matsaira told analysts last week that the group would actively seek to improve service provision to customers by signing up a number of contractors for 2013 through its unit TSL Classic Leaf.
Last year, TSL said it was re-organising itself by exploiting its synergies across the group in terms of tobacco. Even though the group has remained a market leader in terms of tobacco, market share had fallen slightly following the entry of additional auction floors.
Matsaira said the re-organisation would improve the group’s market share.
The other tobacco unit, Propak Hessian, had a strong performance in the year to October 31 2012 as the group improved operating efficiencies and partially recovered its market share.
Overall tobacco posted US$9,48 million and an operating profit of US$3,43 million.
Matsaira said other upstream tobacco activities would be implemented in the second half of this current financial year.
TSL’s revenue in the period was up 9% to US$31,95 million while operating profit grew 437% to US$5,52 million following the streamlining of operations at Chemco.
Another factor which contributed to the increase in operating profit was revenue growth at Bak Logistics and cost control which led to a 45% improvement in operating profit.
There was also a 67% revenue growth at Propak leading to a doubling of the company’s operating profit. After tax profit of US$5,5 million was achieved against US$1,79 million last year and this came as a result of tighter control on cost, restructuring of the group and the disposal of a unit in the firm.
Matsaira said the firm’s focus was on putting up building blocks for strong revenue growth.
The cash generated from operations went up to US$4,97 million from US$4,36 million recorded the previous year. However, the cash generated from operations was used to fund working capital requirements, in particular the tobacco grower scheme.
“Specifically, we made a commitment that we are going to focus on restructuring TSL so that we would allow the group to realise its full potential,” said Matsaira. “We have made very good progress in terms of restructuring and some of those companies reflect that effort.”
The group also announced that Chemco had disposed of TS Timber for what Matsaira said was a fair price.
In its outlook, the group said the momentum from the initiatives launched in 2012 is expected to intensify with resultant revenues reflecting in the 2013 results.