ZIMBABWE – Zimbabwe’s largest seed producer, Seed Co Limited has reported a 24% reduction in its sales volumes for the nine months ended December 31, 2019, reflecting Zimbabwe’s ongoing economic challenges and unfavourable weather conditions.

The reduction in sales volumes saw the group register a reduced profit of ZWL309 million for the period, down from US$23.2 million in the comparative 2018 period, a decrease of nearly 25.5%.

“The reduction in sales volumes, in both the third quarter and the nine months to December 31, 2019, was mainly due to low onset of the season and unfavourable weather forecasts which discouraged farmers from purchasing seed,” Seed Co company secretary Terrence Chimanya said in a statement accompanying its results for the period under review.

The company reported that the challenges it was experiencing had resulted in the firm continually implementing measures to preserve value.

However, amid the challenges, the company managed to secure funding to pay for all seed deliveries from growers and funded the processing of the seed in preparation for the selling season.

“Striking a balance between cost containment and continuing in business (operating and retaining skills) profitably is now part of the company’s challenging daily routine,” Chimanya said.

 “Going forward, preserving capital remains a challenge as the board and management is seized with the Zimbabwean context. The company will also bank on its regional associate investment, Seed Co International Limited, for real capital preservation and earnings.”

Seed Co announced that it was also continuing with its major project of constructing a flagship artificial maize seed drying plant at the company’s Stapleford Complex, just outside Harare, with all the equipment being received from Denmark.

“The outlook remains highly unpredictable due to the current harsh economic environment. The company’s sales volumes are expected to close the current financial year lower than the prior year due to challenges mentioned above,” Chimanya said.

“However, the company remain profitable despite the following; adoption of the new standard on leases by the company this reporting year (IFRS) and the adoption of the IAS 29 (Financial reporting in Hyperinflationary Economies).”

Chimanya also said that the company welcomed the reduction in input Tax (VAT) from 15% to 14.5% effective January 1, 2020 as well as the reduction in effective Corporate income Tax, including 3% Aids Levy from 25.75% to 24.72%.

He said the new directive allowing electricity to be levied in foreign currency for certain players in the economy could improve the power supply from imports going forward.