From tobacco boom to balance sheet strength, inside TSL’s numbers
By Jabulani Simplisio Chibaya
HARARE – WHEN most investors talk about Zimbabwe’s 2025 rally, they talk about gold, mining counters, and currency hedges. But quietly and powerfully another story has been unfolding across the tobacco, logistics, warehousing, agricultural inputs, and property value chain.
That story is TSL Limited, a group that sits at the backbone of the agricultural and logistics ecosystem. Its FY2025 audited numbers show not just growth, but structural strengthening. Yet beneath the good headline figures lie nuances that both ordinary and advanced investors must understand.
This is a deep dive into what the numbers really say, in plain language, but with technical insight where it matters.
The Big Picture: A Strong Operating Year Backed by the Tobacco Boom
TSL operates across four core clusters: agricultural inputs and packaging, tobacco marketplace services, logistics and warehousing, and real estate infrastructure. Its performance is closely tied to the tobacco value chain and FY2025 delivered a record tobacco season in Zimbabwe.
National tobacco deliveries reached 355 million kg, up 53% year-on-year, generating about US$1.2 billion. TSL sits directly inside this flow — through tobacco sales floors, packaging, storage, handling, and logistics. When tobacco volumes surge, TSL’s ecosystem lights up.
Source: TSL
Revenue from continuing operations rose 24% to US$45.6 million, while operating profit jumped 80% to US$16.17 million. Profit before tax doubled to US$14.5 million. Net profit from continuing operations climbed 85% to US$10.53 million. That is not cosmetic growth — that is operating leverage at work.
EBITDA: The Core Engine Is Firing Hard
For serious investors, EBITDA is one of the cleanest measures of operating strength.
TSL’s EBITDA rose 70% to US$19.34 million from US$11.39 million. That is a major expansion far ahead of revenue growth which tells us margins improved and costs were controlled.
This matters because EBITDA reflects the earning power of the business before accounting choices and financing structure. It shows the engine, not the paint job.
EBITDA margin improved to roughly 42% of revenue, very strong for a diversified services and infrastructure-linked group. This suggests pricing power, scale benefits, and improved operational efficiency — especially in tobacco sales floors and logistics.
Source: TSL
What Drove the Good Numbers (What Most People Miss)
Most casual readers see “profit up” and stop there. But the drivers matter more than the totals.
1️⃣ Tobacco Sales Floors Volumes Exploded
TSL handled 81 million kg of tobacco versus 52 million kg prior year, a 56% jump. Decentralised sales floors, more grower participation, and merchant engagement helped. This is a structural competitive advantage — not luck.
2️⃣ Automation Cut Costs
Automation across sales floors reduced staffing and operating costs — delivering 10% cost savings. That is margin quality improvement, not just revenue growth.
3️⃣ Agricultural Inputs — Selective Strength
Agricura volumes surged in:
Fungicides +167%
Fertilizer +137% (but low margin — important nuance)
Animal health +220% (new plant commissioned)
Margins matter more than volume and management actively shifted product mix and rationalised branches to protect profitability.
4️⃣ Logistics and Warehousing Utilisation Is High
General warehouse utilisation reached 91%, up from 88%. Storage demand is strong — and storage businesses produce recurring, defensive income streams.
5️⃣ Property Portfolio Gains Boosted Earnings
Property fair value gains contributed US$1.67 million to profit plus additional OCI gains. This helped earnings but investors should separate operating profit from valuation gains.
Segment Strength: Where Profit Really Comes From
TSL segment operating profit (FY2025):
Agriculture operations: US$8.31m
Real estate operations: US$7.56m
Logistics: US$2.76m
Services: negative contribution
Agriculture + property together generate most profit. Property is not just passive it is a strategic warehouse and logistics backbone with 10% net yield and 87% occupancy — solid for Zimbabwe conditions.
Cash Flow: This Is Where Quality Shows
Accounting profits are one thing. Cash is another.
Operating cash flow rose to US$16.0 million, and after finance costs and tax, TSL generated US$10.2 million in operating cash — more than double the prior year.
Cash balances increased fivefold to US$8.6 million.
This is critical: profits are converting into cash, a major green flag for investors.
Balance Sheet: Quiet Strengthening
Total assets rose to US$99.4 million.
Equity increased to US$68.4 million.
Debt fell meaningfully:
Total borrowings: US$8.5m (down from US$10.7m)
Gearing improved from 18% → 13%
Interest cover improved to 10.35× (very comfortable)
Liquidity improved:
Current ratio: 1.08 (still tight, but better than 1.03 prior year)
Many retail investors miss this — TSL reduced leverage while growing profits. That is disciplined balance sheet management.
Dividends: Real Money Returned
TSL paid:
Special dividend: US$4.8 million
Final dividend declared: 0.742 cents per share
Dividend funded partly by property disposals — investors should note sustainability vs once-off sources.
Audit Opinion — Important but Misunderstood
The audit opinion was qualified, not clean — due to:
IAS 21 foreign exchange accounting
IAS 8 accounting policy compliance
Key audit matter: revenue recognition.
This is not a fraud flag — but it is not trivial either. It reflects complexity around currency and accounting treatment in Zimbabwe’s multi-currency environment. Advanced investors should read full audit notes — but the business remains going concern compliant.
Many ordinary investors ignore audit notes — professionals never do.
What Should Worry Investors
No business is risk-free. Key watchpoints:
⚠ Tobacco dependency — A weaker tobacco season or pricing shock directly affects volumes and throughput income.
⚠ Low margin fertilizer growth — Volume growth doesn’t equal profit growth.
⚠ Property gains boosted earnings — Some profit is valuation-driven, not purely operational.
⚠ Current liabilities still heavy — Short-term borrowings are high relative to cash.
⚠ Qualified audit opinion — Needs monitoring if repeated.
⚠ Commodity exchange volumes still subdued — platform potential not yet fully monetised.
Strategic Growth Drivers Ahead
TSL is not standing still.
Growth initiatives include:
Development of 73-hectare Harare South land bank (~1,900 stands)
Expansion of warehouse space
Rutenga multimodal inland port operationalisation
Agricura branch modernization
Tobacco irrigation area up 22% nationally — supports forward volumes
These are long-cycle value drivers — not short-term boosts.
The Business Model — Why TSL Matters to the Economy
TSL is not just “a tobacco company.” It is a value chain enabler:
Farmer → Inputs → Packaging → Sales Floors → Storage → Logistics → Export → Infrastructure → Property.
It earns fees and margins at multiple points in the chain. That diversification reduces single-point risk and makes it a proxy for agricultural and trade activity.
This is what many retail investors miss — TSL monetises movement, handling, storage, and infrastructure — not just crop prices.
Source: TSL
Final Summary and Outlook
TSL delivered a high-quality FY2025 performance: strong EBITDA growth, margin expansion, rising cash flows, falling gearing, and improved operational efficiency, driven mainly by record tobacco volumes, logistics utilisation, automation, and property income.
Not all earnings are purely operational — valuation gains helped — and audit qualifications must be watched. Tobacco dependency remains the biggest macro risk. But structurally, the group is stronger than a year ago.
Outlook: If tobacco volumes remain firm and infrastructure expansion continues, TSL is positioned for steady earnings and cash flow growth into FY2026 — though likely at a more moderate pace than the breakout year just reported.
The golden leaf didn’t just grow — it built warehouses, moved cargo, financed trade, and quietly compounded value. For investors who look beyond the obvious, that is where the real story sits.
Jabulani Simplisio Chibaya is a Data and AI Consultant specializing in data science, artificial intelligence, blockchain, and cryptocurrency innovation. A seasoned conference speaker, he also writes on the intersection of technology, regulation, and economic development. Contact: Cell: +263 778 921 881, Email: simplisiochibaya22@gmail.com, LinkedIn: https://www.linkedin.com/in/jabulani-simplisio-chibaya
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