LIVINGSTONE MARUFU
Seed producer, Seed Co International Limited’s bottom line in the six months to September 30, 2021, plunged to US$1.5m from US$2.5m reported in the prior comparative period, largely due to rocketing operating costs, Business Times can report.
The company’s finance director John Matorofa said the company’s preparedness for the future pandemics also affected Seed Co.
“(It was) due to the increase in operating costs owing to Covid-19 and early selling season preparedness this year, fall in other income because of non-recurring disposals, strengthening Zambian kwacha leading to the local costs translated to US$ at lower rates,” Matorofa said.
“Also the increase in share of South Africa associate loss on full accounting this year and higher tax expense from more profit contribution from higher tax countries (Malawi and Tanzania) also contribute to the reduction in profit after tax.”
Revenue for the group, however, jumped to US$35.6m from US$27.9m driven by better season preparedness and early sales activity in Malawi, Tanzania and Zambia, local currency price adjustments and translation gains mainly in Zambia following appreciation of the Kwacha currency.
He said the Southern African Customs Union region no longer includes South Africa, eSwatini and Lesotho hence the fall in revenue by more than 50%.
The turnover in Zambia more than doubled to US$15.5m due to price adjustments and early season start while sales in Malawi were buoyed by early demand driven by the government inputs support programme.
Tanzania’s sales increased 78% to US$4.1m driven by early demand while sales in Kenya declined 17% due to drought.
Nigeria’s turnover was down 42% due to stock unavailability following production challenges due to heavy rains last season.
Matorofa said maize seed dominated both revenue and volume contribution driven by strong demand in Malawi, Tanzania and Zambia.
Soya seed sales increased compared to last year on account of better stocking and interest coming out of Mozambique.
Other sales include wheat and bean sales in Zambia and Mozambique respectively.
There was a 37% jump in operating expenses attributable to early start of the sales and marketing season, translation impact of currency gains in Zambia and increased activities as Covid-19 restrictions eased.
Debt increased from last year-end to finance the early start of the selling season. However, gearing dropped to 49% from 63% as the equity position of the group improved.
Operating cash outflow increased attributable to procurement of seed from growers and chemicals for processing ahead of the summer selling and seed production season.
In the outlook, Seed Co said it will ride on the market stability and positive sentiments in Zambia, take advantage of the market opportunity in Malawi, harness the opportunities coming out of Mozambique, watch overheads and funding costs, collect debtors to mitigate provisions, hedge currency risks and closely monitor developments in new markets
