Seed Co bounces back to profitability
BUSINESS REPORTER
Seed producer, Seed Co Limited reported a profit of ZWL$15.8bn in the 12 months to March 31, 2023, swinging from a loss from ZWL$2.2bn in 2022, due to increased seed demand.
John Matorofa, group finance director, anticipates that the strong trend will hold due to the high demand for seeds.
“The company posted a significant profit after tax turnaround of ZWL$15.8bn in 2023 from a loss of ZWL$2.2bn in 2022. Profitability was driven by 14% volume and 156% revenue growth as well as increased United States dollar-denominated sales,” Matorofa said.
According to Matorofa, maize continued to be the leading seed crop, accounting for 52% of all sales.
He said volumes for soybeans grew by 50% as demand increased, driven by import substitution drive.
Wheat sales dropped by 6%, due to power constraints while barley increased by 61%.
Rising working capital funding needs and exorbitant interest rates caused finance costs to increase by almost five times, Matorofa said.
He said the contribution from associates and joint ventures more than doubled, primarily as a result of an increased Quton profit share that helped make up for decreased contributions from Seed Co International and Prime Seed Co Zimbabwe.
“Quton’s profitability benefited from foreign exchange gains arising from United States dollar denominated sales settled in Zimbabwe dollars at the obtaining official exchange rates.
The development comes as Seed Co International Limited’s bottom line fell by 59% to US$2.9m in the 12 months to March 31, 2023 from US$7.1m reported in the prior comparative period.
Group CEO, Morgan Nzwere said the decline was due to exchange losses.
“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.
“The group’s net profit declined mainly because of exchange losses,” Nzwere said.
He said the group’s cash generation remained positive but at a lower level compared to the prior.
Revenues also increased by 14% to US$103.5m in the reviewed period from US$88.5m reported in the comparable period due to increased volumes in East Africa and Zambia.
“Revenue increased buoyed by good volume performance in East Africa and Zambia. Turnover and volume growth registered this year confirms the strength of the group’s marketing standing and brand equity amid global and regional challenges,” Nzwere said.
The gross margin for Seed Co was flat, and it was under pressure from global inflation that could not be passed on to small-scale farmers, he said.
