• PAT wilted by 59%
  • Exchange losses widened by 200%
  • The Company faced a busload of headwinds at national and global level

The graph below shows Seed Co International’s performance in US Dollars

Harare- Agricultural concern outfit, Seed Co International Limited, a leading certified seed company involved in the breeding, multiplication, and distribution of mainly hybrid seed varieties, recorded a significant plunge in net profit from US$7.1 million in FY2022 to US$2.9 million during the year ended 31 March 2023 as exchange losses rocketed by 200%.

The decline in profitability was largely attributed to the unfavourable currency exchange rates in the countries where the company operates, except in Zambia where the Kwacha started firming since President Hakainde Hichilema in 2022.

“The financial year under review was of mixed fortunes evidenced record business growth in some markets, reduced business in others, and loss of value from exchange losses as regional currencies depreciated against the USD,” the Company’s chairperson David Long said in a statement accompanying the full year financials.

“Despite achieving business growth that is testimony of brand resilience, external factors mainly exchange losses more than reversed business growth gains, and reduced the Group's profitability,” he said.

The company operates in several African countries, including Zambia, Botswana, Kenya, Malawi, Nigeria, DRC, and Angola. The Company is primarily listed on the Botswana Stock Exchange, with a secondary listing on the Victoria Falls Stock Exchange.

The stronger dollar against other currencies, particularly in the African countries where the Company operates, has had a significant impact on the company's profitability. The decline in the performance of the local currencies against the dollar has resulted in significant exchange losses for the company, leading to the decline in net profits.

The dollar witnessed significant gains in Kenya, Nigeria, DRC, Malawi due to inflationary pressures, political unrests and foreign currency deficit.  Currencies in these respective countries lost value significantly against the dollar, making it more expensive for the Company to import raw materials and inputs needed for its operations.

This further affected the purchasing power of the consumers as the company’s products became expensive in local currency which was liquid to most farmers.

Nigeria, the largest economy in Africa saw one of its worst economic performances during the period under review with the Naira overvalued on the formal market. That gave a premium of over 30% to the parallel market where the Naira was trading in a region of 700 to 800 against the dollar, compared to 459 to 465 on formal market.

Long said that gross margin remained flat as the Company faced pressure from imported global inflation that could not be passed on in pricing to our small-scale farmers. Revenue came in at US$103.5 million against cost of sales of US$57.5 million.

“Overheads increased in line with business growth in East Africa and in response to global inflation developments. The Group's cash generation remained positive but at a lower level compared to prior year,” said Long.

Borrowings and finance costs increased from CAPEX and working capital growth. Loans and borrowings shoot to US$46.2 million from US$42.2 million in the comparative prior year.  

The Group's net debt-to-equity ratio increased because of lower profitability and the impact of exchange losses on equity.


One of the primary effects incurred by the Company were foreign currency exchange losses. Exchange losses have a significant impact on seed companies, to be precise Seed Co International as it operate in multiple countries and transact in different currencies. When a company's home currency depreciates against other currencies, the foreign currency-denominated assets and liabilities of the company lose value, leading to exchange losses.

In the case of Seed Co International, the decline in the performance of local currencies against the US dollar resulted in significant exchange losses for the company, leading to a decline in net profit. This is because the company earn revenues in local currencies but has to pay for imports and service foreign debt in US dollars. The decline in the value of local currencies against the dollar made it more expensive for the company to import raw materials and inputs needed for its operations.

Exchange losses which widened by 200%, from exchange gains of US$1.5 million to a loss of US$4.5 million largely chewed the company’s profitability efficacy.  When the local currency depreciates against other currencies, the company's foreign currency-denominated assets and liabilities lose value, leading to exchange losses. This erodes the company's earnings and negatively impact its financial position.

For instance, non-current assets decreased due to the impact of depreciating regional currencies. The carrying value of investments in associate and joint ventures reduced due to FX induced losses.

The conflict in Ukraine and Russia further exacerbated the performance decline across all markets. African states import most of their fertilisers, fuel and pesticides from Russia and after its invasion, the subsequent sanctions from the Western countries led to disruption in supply chains.

 As a result, the Company faced higher costs of inputs like fertilizers, pesticides and fuel, which led to lower profitability and higher prices for customers. The price of higher prices to consumers was an impoverished consumer spending behaviour. This led to lower sales.  

The company’s profitability was also affected by prolonged droughts in East Africa and parts of Central Africa. Kenya experienced drought spells during the period under review affecting the Agric-seeds business.

Droughts led to lower purchases on the company’s products as most farmers are subsistence ones, who rely on natural rains. Besides, prolonged drought spells to lower crop yields and higher input costs. This strained the company's finances and limit its ability to expand operations. Prolonged drought spells curtailed the demand for the Company’s products.

Another key factor for the decline in profitability, though the company did not mention it was the advent of recurrent power outages. Power interruptions were key in Kenya and Nigeria which disrupted the company's production processes, leading to a decline in output and profitability. Outages forced the Company to incur additional expenses as it had to divert to generators which was costly, due to shortages and spiking of oil prices due to Russia Ukraine war.

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