Seed Co plunges into losses

LIVINGSTONE MARUFU

Seed Co Limited has plunged into a loss-making position for the half year to September 30, 2025, hammered by collapsing export volumes, timing disruptions in agricultural cycles, and a shortened winter wheat season that severely weakened its revenue base, Business Times can report.

The decline was worsened by rising finance costs, driven by delayed payments from debtors which forced the seed producer to take up short-term loans to plug liquidity gaps.

In a statement accompanying the half-year financials, company secretary Faithful Sithole said the sales downturn came despite an otherwise stable macro-economic environment.

“Finance costs increased in line with the Company’s use of short-term facilities to bridge delayed receipts from debtors. In the absence of currency distortions and reduced volume performance the business posted an interim loss of US$5.7m compared to a profit of US$1.2m prior year same period. This reflects normalisation of the seasonality of the business, characterised by wheat and barley sales mainly and cost accumulation in the first half, under stable US$ functional currency reporting,” Sithole said.

Revenue fell sharply to US$11.6m, a 39% year-on-year decline, largely reflecting reduced volumes across key product lines.

Despite the weak outturn, Seed Co maintained strong underlying cost discipline, with operating expenses remaining broadly aligned with the prior year. This demonstrated, Sithole said, management’s continued emphasis on operational efficiency in a fully dollarised cost environment.

Gross margins remained resilient in a difficult market, and the company managed to turn cash flows positive through tighter working capital controls, strengthened collections, and deliberate inventory optimisation.

Management described the half-year period as one marked by strategic adjustment, disciplined execution and a sustained focus on aligning operations with shifting market conditions.

Sithole reiterated that the company’s long-term competitiveness continues to be anchored by sustained investment in research and product development.

“Seed Co’s long-standing investment in research remains the foundation of its competitiveness and resilience. During the review period, the Company broadened its maize seed portfolio with the introduction of medium-maturity hybrids SC661 and SC657, both developed for stable performance across variable rainfall zones. The new high-yielding white flour-colour wheat variety, SC W9104, further diversifies the product offering and enhances value to growers. These innovations reinforce Seed Co’s role in advancing climate-smart agriculture and delivering varieties that improve productivity and food security,” she said.

Seed Co closed the period with a strong balance sheet, supported by shareholders’ equity of US$120.8m anchored in property, plant and equipment, inventory and receivables.

The group expects a stronger second-half performance as farmers ramp up planting in preparation for the 2025/26 summer season. Management is banking on operational efficiency, cash flow discipline and continued product innovation to drive long-term shareholder value despite the muted first-half base.

Seed Co also aims to deepen market access across the region by leveraging synergies within the broader Seed Co International network. It anticipates direct benefits from expected revenue growth and improved profitability within regional operations.

Looking ahead, the company says it is well-positioned to capitalise on emerging opportunities in the second half of the financial year and beyond, while supporting national and regional food security initiatives.