Limagrain increases stake in SeedCo

HARARE - French seed company Limagrain has increased its stake in Zimbabwe’s largest seed producer, SeedCo, from 15 percent to 30 percent, a top company official has said.

SeedCo chairman John Rooney said relations between the two agro-concern companies will see them extending their tentacles into more countries on the African continent.

“I am delighted to report, that our partnership with Limagrain is working very well and is expected to be mutually beneficial to take your company to the next level in research and development,” said Rooney in SeedCo’s annual report published in July.

“The conclusion of the equity partnership this year has resulted in Limagrain now having a 30 percent stake and their capital injection significantly strengthened the balance sheet of the company,” he added.

The latest development comes after Limagrain — through its subsidiary Vilmorin & Cie — in 2013 agreed to inject $40 million into SeedCo in return for a 30 percent stake in the company.

Early last year, Limagrain — the largest seed company in Europe and the fourth largest in the world — bought over 20 million SeedCo shares at a special bargain price of 99,25 cents as part of the private placement deal — translating to a 15 percent stake in the seed producer.

Meanwhile, Rooney said SeedCo managed to achieve respectful earnings growth despite another year of serious challenges, due to early season variety stock shortages in the maize business and the worsening industry environment in the cotton business.

In the full-year to March 2015, SeedCo’s turnover retreated by 11 percent to $95 million due to maize seed product shortages.

Gross margins decreased by one percent to 46 percent while the operating costs were reduced by 11 percent.

The group’s profit after tax increased by 27 percent to $15 million, while basic and diluted earnings per share increased by six percent to 6,92 cents and 6,89 cents respectively.

“The balance sheet grew by nine percent to $187 million with non-current assets increasing from $49 million to $89 million due to the completion of new business premises in Malawi and conversion of $23,7 million worth of Zimbabwe government debt to three to five-year Treasury Bills,” he said.

In the period under review, SeedCo’s borrowings reduced by 90 percent to $5 million, with the new capital injection by Limagrain playing a huge part.

Rooney added that the seed producer successfully concluded an equity partnership with Mahyco resulting in a 60 percent stake in the cotton seed businesses being disposed-off to the latter.

“The newly-constructed factory and premises in Malawi are now operational and the Harare research laboratory is now fully equipped and functional. This will see the company using modern research facilities and technology and shorten time to market on new product development,” he added.

Comments (1)

"An insidious spread of influence and control: the Party's tentacles reached into every nook and cranny of people's lives" How is Seedco's African expansion insidiuous?

Gatsi Rusere - 13 August 2015

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