Seed Co Zimbabwe revenue declines 5% on lower sales volume

ZIMBABWE – Seed Co Zimbabwe’s revenue for the year-ended March 31, 2018 declined 5% as a result of production challenges including high disease pressures, drought among other adverse factors.

Increase in Other Income from commission based sales and exchange gains saw the profit for the year grow by 5% to US$21.4 million, also reducing finance costs at US$2.5 million from US$4.1 million and strong performance of the associate cotton seed business.

Income improved due to increased volume of cotton seed sales to Government inputs programme.

Group turnover was down 5% to US$128.5 million compared to US$134.6 million recorded in the previous year.

However, winter cereals and soybeans improved in volumes offset by critical shortages with product demand outstripping supply in all markets.

According to chief executive officer Morgan Nzwere, the group discarded more than 23% of seed maize production which failed to meet quality criteria as the crop season experienced poor pollination due to high temperatures.

Growth in the other lines of income, namely commission, non-seed sales, doubtful debt recoveries, up to US$4.4 million from a negative US$98 379 which the company said was pushed up by increased volume of commission-based sales and non-seed sales.

The group said margins for the period remained unchanged as increased volumes of lower margin winter cereals and soya beans was weighed down by a reduction in volume of high margin long season varieties.

In Zimbabwe, Seed Co benefited from the Government of Zimbabwe business with high demand for premium varieties by commercial farmers although it said the business was currently in stock-out position.

In the report, normal dividend of 2.95 cents at 3 times cover plus an additional special dividend of 1.48 cents to bring overall cover to 2 times was declared.

For the year to end March 2019, the company maintained a positive outlook, projecting a 40% increase in maize seed production despite of the challenges and stock-outs.

The year is expected to still be influenced by production challenges including high disease pressure areas, erratic rainfall and poor pollination due to high temperatures experienced.

Mr. Nzwere however said they were exploring cob harvesting and seed drying technology to speed up seed availability and contain diseases associated with late harvesting in a bid to mitigate the challenges.

Other initiatives include increasing capacity for growers by providing working capital, centre pivots, on farm weather stations, farming equipment, silos and grading sheds.

Seed production in Nigeria doubled while in Ethiopia there was significant development as political will to attract new investors and breakthrough was eminent.

In Kenya, the business experienced serious stock shortages in all the popular varieties despite of a strong demand.

Zambia’s local maize seed sales reduced by 31% due to the, among several issues, maize commodity price slumping to a low of $120 and thus dissuading farmers from planting.

Seed Co also announced it was splitting its regional operations into constituent businesses, a process the group CEO said will enhance the Group’s capacity to raise capital to finance R&D, growth and expansion opportunities in the seed business in Africa and beyond.

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