SeedCo’s profit after tax grew to ZW$2 billion from a loss of ZW$7 billion
The export front recorded a growth of 88%
However, maize sales declined by 45%
Harare- Largest seed company, SeedCo Zimbabwe Limited posted a profit rebound of 65% during the half-year ended 30 September 2022 to ZW$2 billion from a loss of ZW$7 billion during the same period last year amid a growth of 88% in exports.
The profit after tax was realised despite a surge in monetary loss of 119% to ZW$8 billion from ZW$3 million recorded during the comparative prior year. Between April 2022 and September 2022, the local currency shed by 75% on the formal market.
Revenue increased by 5% to ZW$8.4 billion from ZW$8.1 billion as selling prices were regularly adjusted in line with inflationary pressures and exchange rate movements.
The Group garnered a record local winter and barley sales of 6.320 metric tonnes which was a growth of 30% ahead of the prior year. However, overall, winter sales were 8% lower in the absence of repeat export sales. Last year 2.000mt of wheat was exported to Nigeria.
However, maize sales volumes declined by a whopping 45% as farmers failed to pre-stock due to a liquidity crunch in the economy necessitated by a tight monetary policy.
The other reason behind lower maize seed sales besides not mensioned by the Group bisides climate change and droughts is an unrealistic price cap put by Grain Marketing Board (GMB) on maize. In an interview with different farmers in Farm and City shops around Harare, more farmers preferred buying sunflower, yellow maize and groundnuts due to the high prices they obtain on the market than white maize which is highly regulated by GMB.
"On the export front, the business registered a notable 88% volume growth satisfying the shortage in the region caused by drought in the prior year, particularly in East Africa,” the Group’s chairperson, David Long said in a statement accompanying the half-year financials.
“Gross margins were stable in inflation-adjusted terms owing to inflation tracking price adjustments and the relatively lower carrying value of wheat stock carried over from the prior year.”
A loss was absorbed from associates mainly contributed by Seed Co International whose first half performance was subdued with notable early sales reduction in Malawi and a drop in revenue in Nigeria due to product unavailability and in East Africa due to drought.
Long added that the carrying value of debtors quadrupled from the closing position last year's end and this is attributable to winter cereal credit sales as well as the revaluation of grower debts that were advanced denominated in USD.
“Short-term borrowings increased in line with the borrowing cycle of the business, characterised with the intake of seed from growers as well as the processing and the increase is also due to inflation-induced increase in working capital requirements as well as the need to fund delayed settlement of Government related debtors, “Long said.
Going ahead, Long said, “Despite the harsh and uncertain operating environment, the Board and management will focus on defending the leading market position and stakeholder value enhancement by harnessing hard currency local sales as well as exploiting regional export opportunities.”
He added, “The business has adequate seed and is prepared for the main summer selling season which is now underway while the regional business is also well prepared for the season on the back of adequate stocks out of Zambia also serving the East African markets, improving economic environment in Zambia, stability in Tanzania and continued business growth in Mozambique.”
Long is further confident that the Group’s optimal varietal mix of seed will match the mixed rainfall forecasts with most parts of Southern Africa expecting normal to above normal rains and East Africa anticipating normal to below normal rains.
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