Cash crunch, export slowdown hit Seed Co

CLOUDINE MATOLA

Tighter credit controls and a strategic shift to cash sales, driven by persistent distribution chain challenges, weighed heavily on Seed Co Limited’s performance in the third quarter (Q3) to December 31, 2025, Business Times can report.

The company’s group secretary, Faithful Sithole, said reduced winter cereal seed trading on the domestic market and lower export sales also dragged down performance during the period under review.

“Comparative performance declined, primarily reflecting reduced winter cereal seed trading in the local market due to a shortened planting window following the late cessation of last season’s rains, as well as lower export sales after the prior year’s record performance, as the company’s regional associate markets rebuilt stock positions.

This was compounded by tighter credit controls and a deliberate shift towards cash-based sales in the local market in response to ongoing challenges within the formal distribution chain,” Sithole said.

The twin pressures of weaker volumes and stricter credit management resulted in a trade-off between sales growth and profitability, as the business prioritised liquidity preservation over aggressive revenue expansion.

During the quarter, revenue declined by 21% to US$49m, down from US$62.7m recorded in the prior comparative period.

Operating profit fell even more sharply, plunging 41% to US$14.7m from US$25m recorded in Q3 of the 2025 financial year.

Volumes also took a significant knock, dropping 32% to 18,192 metric tonnes from 26,919 metric tonnes in the comparable period.

The decline reflects both seasonal constraints and the company’s deliberate tightening of credit terms in a market still grappling with liquidity challenges and structural inefficiencies in the formal distribution chain.

Looking ahead, Seed Co is shifting gears as the summer selling season winds down, with renewed focus on the winter cereal campaign and strengthening cash generation.

“As the summer selling season winds down, focus is shifting toward preparations for the winter cereal selling season, with continued emphasis on cash generation and disciplined working capital management, consistent with the business’s cyclical operating model,” Sithole said.

Seed Co said it continues to leverage its strong brand equity and proprietary seed genetics, alongside synergies within its broader and expanding international network, to profitably support its cash-sales-led strategy. The group remains actively engaged in the local distribution chain while positioning itself to exploit export opportunities as regional demand recovers.

Despite the short-term pressure on volumes and earnings, the company’s pivot toward liquidity discipline underscores a cautious but strategic approach in navigating Zimbabwe’s evolving agricultural and trading environment.