HARARE - Agro Supplies group, Chemco Holdings Limited (Chemco) has recorded a $2,3 million loss after tax for the year to October 2011 compared to $808 231 the previous year, management says.

Chemco is a subsidiary of Tobacco Sales Limited (TSL), a 64 percent shareholder.

Its subsidiaries include Agricor, Agricura and TS Timber.

Givemore Mafunga, Chemco company secretary, said $247 798 of the loss related to discontinued operations.

“Included in the group loss for the year, is a book loss of $769 215 with regard to the sale by Agricor limited of a non-core asset, Premier Milling Company (PMC),” he said in a statement, adding that group turnover from continuing operations stood at $6,5 million, 13 percent above $5,8 million in 2010.

PMC was sold in October, 2011.

“Head office costs were considerably higher than prior year due to a provision for non-payment of the debt resale of Agpy in 2010 and increased staff costs in respect of retirement and replacement of executives.”

Chemco, yet to receive full payment from a management consortium that acquired Agpy in 2010 following a management buyout and also two loss-making divisions Chemco Transport and Farm-a-Rama, expects to recover the debt going forward.

Alistair Gibson, Chemco managing director, said the group had as of June 2011 to date only received $365 000 as down payment for the asset without divulging the total value of the transaction.

“We have only been paid once, an amount that is between 15 and 20 percent of the total debt and we are looking to recover the outstanding payments,” he said without also disclosing who had purchased the property.

He said Agricura sales went up seven percent on comparatives while its product margins remain competitive.

Expenditure levels were higher, driven by depreciation on buildings, stock obsolescence provisions and staff costs.

Plant capacity utilisation remained too low to cover plant operating costs, thereby resulting in an operating loss.

Sales at TS Timber also improved by 18 percent on prior year, but margins dropped three percent due to increased competition.

The timber division’s business was not spared by liquidity challenges, resulting in a loss for the year despite having a strong customer base.

Various options with regards to restructuring and rationalising the group have been explored going forward.

Mafunga said management was mapping ways to turnaround the group’s fortunes this year into 2013.

“Cost containment is essential and replacement truss machines for TS Timber are being sought,” said the company sectary.

“After the sale of PMC, Agricura is in a stronger position to source material, although this was late for the current summer season.

Improved cash flows and stocking will enable Agricura to participate in the major agricultural tenders for cotton and tobacco,” he said, adding that plans were in place to increase utilisation at Agricura to 50 percent and strengthen links with key agricultural players.