Seed Co regional expansion pays off

HARARE - Listed seed producer, Seed Co, says its venture into other African markets is now paying dividends following a slow-down in Zimbabwe’s economy.

The group’s chief executive, Morgan Nzwere, yesterday said Seed Co’s regional expansion has helped the company to remain stable under a challenging economic environment.

“If we had not diversified, I don’t know where we could be as a company,” Nzwere told delegates attending an Institute of Directors of Zimbabwe (IoDZ) breakfast meeting in the capital.

“At the moment we are supporting Zimbabwean activities from other operations in regional countries,” he added.

This comes as Zimbabwe’s challenging economic environment —forecast to contract by 0,3 percent this year and 2,5 percent in 2017 by the International Monetary Fund —has resulted in the closure of many businesses due to high production and finance costs and depressed demand among other things.

Nzwere said Seed Co, which operates in 15 African countries and continues to grow making it the leading seed house on the continent selling over 80 000 tonnes of seed per annum with a group turnover of $230 million, is looking for more growth opportunities elsewhere.

“The future is very bright for us as we can pursue opportunities in all 54 African countries. We have just gone into West Africa and if we play our cards well in one country we can end up doing more than we are currently doing as a group,” he said.

In the outlook period, Nzwere noted that Seed Co will continue increasing its market share in East Africa through expansion of distribution network, and entry into the lucrative highland market in Kenya

The seed producer is also anticipating an adoption by farmers in the drier parts of the continent of the recently released 300 early maturing series which are giving a commendable yield advantage due to better response to the drier weather conditions.

In the full year to March this year, Seed Co defied the effects of El Nino experienced in the previous farming season registering a three percent increase in annual profit to $15,4 million from $15 million in the period to March 2015.

During the year, Seed Co also managed to grow its revenue despite weaker currencies and reduction in government input programmes across the continent where the company has operations.

Revenue amounted to $95,9 million from $94,6 million recorded in the previous year. Finance income for the year decreased 16 percent due to a reduction in short-term money market deposit interest rates.

The seed company has managed to register its footprint in different markets across the continent and these include Botswana, Kenya, Malawi, Tanzania and Zambia.

The turnover for the year was maintained despite a very tough environment with several factors affecting demand.

The impact of the currencies depreciation was particularly notable on translation of results to the United States dollar reporting currency.

Gross margins for the period increased across the board going up seven percent due to US dollar product pricing in some depreciating currencies, reduced unit cost of production due to improved yields as well as improved efficiencies in the value chain.

The group’s bank borrowings increased due to funding obtained to increase seed production during the year.

Finance costs decreased 39 percent after the group cheaper facilities.

Operating costs were up due to the inclusion of the new vegetable business expenses as well as increased market development costs in new markets.

Seed Co has spent over $2,6 million into vegetable business so far.

The strategic technical partnership with Limagrain has also enabled the group to access the latest technologies in hybrid seed breeding activities, and the commissioning of the recently completed technology laboratory.

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