Poor winter cropping weighs down SeedCo

HARARE - Zimbabwe Stock Exchange-listed seed producer SeedCo has reported a $9 million loss after tax in the half year to September 30, 2012 from a $1,4 million loss incurred same period prior year.

The group attributed the depressed performance to reduced winter cereals planting and delayed off-take of input programmes.

Revenue for the period was also significantly lowered to $13 million from $30 million.

But, the group said the loss position will be reversed in the second half of the year with the commencement of the 2012/13 selling season.

“With well-balanced stocks, the group is well positioned to supply the customer needs in the various markets and will continue to focus on improving both quality and production capacity in new markets,” SeedCo said.

Morgan Nzwere, SeedCo’s chief executive, told shareholders at an annual general meeting in August that the company would cut seed production to 24 000 tonnes compared to last year’s 64 000 tonnes, a move aimed at clearing carry-over stock.

This is despite the seed producer’s projections early this year to produce 68 200 metric tonnes of seed for 2012/13 in correspondence to the market size.

During the half year, borrowings went up by $19 million from prior year to $63 million driven by funding of the current year seed purchases which were at a significantly lower level than in prior year.

Finance charges also doubled up compared to corresponding period prior year.

“The major debtors have been paying very slowly in Zimbabwe due to the tight liquidity.”

Current assets stood at $110 million while overhead expenses were 10 percent higher than prior period owing largely to increased business development activity in new markets.

“In addition sales and marketing initiatives in preparation for the selling season that commences in the second half of the year were activated early in the current year,” the group added.

During the period under review, the group released four new products, two of which were soya bean varieties in Zambia and two wheat varieties in Zimbabwe.

“Independent product trials still indicate the group’s products performing better than competition,” said SeedCo.

Going forward, the group is anticipating growth in new markets and positive margin growth in existing regional markets in spite of the challenges being faced in Zimbabwe.

“Our business development efforts are progressing according to plan,” SeedCo said. - Business Writer

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