BUSINESS REPORTER
Seed producer, Seed Co International Limited is restructuring its business model and balance sheet in response to rising costs and devaluing currencies.
This comes after some markets experienced decreased business and value loss due to exchange losses as regional currencies depreciated against the US dollar.
“The group is restructuring both its business model and balance sheet to respond to the rising cost of doing business and to hedge against weakening currencies,” Seed Co International company secretary Eric Kalaote said in a statement accompanying financial results for the year to March 31 2023.
Although the company’s topline increased 20% in the reviewed period to US$103.5m from US$88.5 in prior comparative period, profit fell to US$2.9m from US$7.1m due to rising costs and exchange losses
Gross margin was flat and faced pressure from imported global inflation that could not be passed on in pricing to our small-scale farmers.
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.
“Borrowings and finance costs increased from capex and working capital growth.
Associate and joint venture’s negative contribution increased largely on account of exchange losses,” Kalaote said.
The company’s 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 foreign exchange induced losses.
Receivables increased mainly due to the growth in business this year.
The group’s net debt-to-equity ratio increased because of lower profitability and the impact of exchange losses on equity.
In the outlook, the company expects to recover from the decline in profit.
But, expects global supply shocks and imported inflation to remain elevated further compounding the effects of climate change in Africa.
