20 November 2012

Zimbabwe: Seed Co Revenue Plunges

SEED CO revenue for the interim period to September 30, 2012 plunged by 56,3 percent to US$13,2 million weighed down by the late onset of Government seed programmes in Zimbabwe, Zambia and Malawi.

Consequently, after-tax-loss for the same period went reeling, worsening from US$1,4 million last year to US$8,8 million this year.

Seed Co said Government and donor-funded programmes in the three countries delayed with programmes in Zambia and Malawi only starting in October, after the end of its half year.

The firm said while the first half of the year is traditionally dominated by wheat seed sales in Zimbabwe, demand has been lower than expected this year due to electricity challenges.

"This has resulted in an adverse impact on our results unlike in the prior year when all these programmes commenced early and we were able to push significant volumes before the half year end.

There are strong indications that we will do good business in these programmes in the second half of the year," Seed Co said in an income statement released yesterday.

The company, therefore, expects to overturn the US$8,8 million loss in the second half of the year when the main season commences.

The firm said it had started to see activity on the retail market, but pointed out that it was a little too early in the season.

Profitability in the interim period was also affected by an increase in finance charges, from US$1,4 million in the comparative period last year to US$3,3 million in the half year to June 2012.

This was, ostensibly, the result of an increase in borrowings by US$19 million to US$63,2 million as of September 2012.

Seed Co looks forward to improved margins across all markets, renewed confidence in Malawi's economy and increased donor input support programmes, continued farmer support programmes in Zambia while new business units for cotton and seed in Tanzania are expected to make significant profit contribution to the group this year.

The group said it has commissioned a new cotton acid de-linting plant in Tanzania and Malawi is expected to come on stream soon with a plant already under installation in Lilongwe.

Seed Co released four new seed varieties, two of which were soya bean varieties in Zambia and two wheat varieties in Zimbabwe with trials indicating the products are better than competing brands in the respective markets.

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