Seed Co reports 16% growth in revenues as profits increase four fold to US$9.07m

ZIMBABWE – Seed Co Limited, one of Africa’s leading seed producers, reported a 16% increase in revenues to US$73.4 million offsetting a 323% jump in after-tax-profit to US$9.07 million in the year ended March 31, 2019.

In 2018, the seed producer posted revenues of US$63.3 million while profit after tax stood at US$2.14 million.

The remarkable performance was spurred by upward price adjustments necessitated by the inflationary environment prevailing in the country.

Despite the dry spell and constrained consumer spending witnessed during the production season, the company’s chief executive Morgan Nzwere said the group had adequate stocks to meet anticipated demand for the forthcoming season.

“We managed to contain our costs despite the inflationary pressure. We tried to increase our prices, but we were surprised the prices did not last long,” he said.

The company said that its performance was also affected by monetary and fiscal policies experienced during the period under review but, however, the company’s financials were denominated in United States dollars.

Seed Co said after the introduction of Real Time Gross Settlement (RTGS) dollar in February this year, it then used the interbank market rate to denominate the March earnings, reports NewsDay.

“It is difficult to estimate the impact of exchange rate changes on future financial performance, but the group expects that it will maintain its market dominance, with the new products expected to spur growth.

The currency dynamics will continue to present product pricing challenges,” Nzwere said.

The book value of stock declined significantly to US$7.4 million from US$17 million while trade and other receivables also declined to US$10.9 million from US$19 million due to the currency re-denomination

During the period, majority Treasury Bills matured and were settled during the period, with part of the proceeds re-invested in government savings bonds last October

The balance outstanding from government was settled post year-end.

During the period, the company’s assets totalled to US$109.9 million compared to US$249 million in a similar period last year while liabilities were US$14.7 million from US$60.8 million in 2018.

Nzwere said that the company also experienced logistics challenges after the Government of Zambia banned the export of maize.

Despite the challenges, the company has enough maize carry over stock to kick-start early sales across markets this coming season

He revealed that Seed Co would spend US$10 million to acquire an artificial seed drier, set to be commissioned in February 2020.

The company acquired Alliance Seed of South Africa, which will drive the vegetable seed production business.

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