Seed Co shareholders in fifth year dividend drought
LIVINGSTONE MARUFU
Zimbabwe’s largest seed producer, Seed Co Limited’s shareholders have missed out on dividend payouts for the fifth year running, Business Times can report.
Group CEO Morgan Nzwere blamed severe liquidity crunch and problems with government debts as the main reasons why it hasn’t declared dividends to its shareholders for such a long period.
This, according to Nzwere, has impacted the working capital of the business.
“It is the case of liquidity in the Zimbabwean market. I think you all know the amounts we ended up being owed by the government at the end of the financial year and also stressed liquid conditions in Zimbabwe in terms of raising borrowing facilities to capitalise business. It will be remiss of us to declare a dividend when we know that we will struggle to raise capital to run the business.
The liquidity challenge issue is the greatest consideration for not paying dividends,” Nzwere told Business Times on the sidelines of the company’s annual general meeting held in the capital last week.
He added: “It is a situation we continue to monitor, should the situation improve we are mindful of the fact that there are shareholders in Zimbabwe who also need a dividend in local currency.
If cashflow permits we will definitely be recommending to the board for the declaration of dividend in Seed Co Limited.”
In its trading update for the quarter to June 30, 2024, Seed Co reported a 15% volume growth compared to prior comparative period.
On the other hand, the regional business registered 24% volume growth.
In the region, maize sales in Ethiopia and Nigeria as well wheat sales in Zambia boosted volume growth.
Nzwere said Seed Co products continue to out-perform competitor products in independent trials following robust investment into research and development.
“Several exciting new products in the pipeline. On wheat, we have two new products undergoing regulatory release testing and on maize we have new hybrids being launched [SC555, SC657, SC665, SC729 and SC803.
In the region, SC803 hybrid was commercialised for the highlands in Kenya while Ethiopia harmonized its seed regulations with COMESA this year immediately allowing for the commercialisation of several Seed Co products listed on the COMESA catalogue,”Nzwere said.
He said Zimbabwe maize seed production yield (13,500mt) is 46% lower than last season due to drought; however, 33,000mt maize availability is more than adequate, boosted by 19,500mt carryover stocks, to satisfy both local and export demand.
The intake of seed from our growers and own farms for processing is now at about 55% for maize and about 50% for soya.
Seed Co has collected 60% of its year-end closing receivables and 52% of government related debtors and expects to collect the rest before the end of October.
The company expects a huge surge in demand for seed in Zimbabwe following normal to above normal rain forecast.
