Harare – Local seed producer, Seed Co Limited’s revenue for the year ended 31 March 2019 increased by 16 percent to $73.4 million compared to $63.4 million achieved in the same period last year mainly due to upward price adjustments necessitated by the inflationary environment prevailing in the country.
Profit after tax scaled up 323 percent to $90.7 million from $21.4 million achieved in the prior comparative period.
Gross margin shed 3 percentage points due to the increase in the seed production costs, while overheads were 5 percent higher than prior year despite huge inflationary pressures due to cost reduction measures across the value chain.
In a statement accompanying the financial results, Seed Co chief executive Morgan Nzwere said that the currency devaluation had a knock on effect on the Group’s property, plant and equipment as well as on trade and other receivables.
“The $3.9 million decrease in property, plant and equipment resulted from the local currency devaluation. This was partly offset by the subsequent revaluation of fixed assets,” said Nzwere.
“Trade and other receivables also declined due to the currency redenomination. The balance outstanding from government was settled post year end.”
Total assets value decreased by 56 percent to $109.9 million from $249.1 million in prior period due to the currency adjustments.
Nzwere said that the Group has adequate stocks to meet anticipated demand for the forthcoming season despite the inflationary challenges experienced by growers and the dry spell experienced during the production season.
On the outlook, Nzwere said the Group expects that it will maintain its market dominance with new products expected to spur growth while the vegetable business is expected to maintain its upward growth trajectory.
On currency dynamics, Nzwere said this will likely continue to present product pricing challenges.
Equity Axis News
Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment.