SeedCo posts early profit

HARARE - SeedCo Holdings (SeedCo), one of Africa’s largest seed producers, yesterday reported a $5,9 million profit after tax for the six months ended September 30, 2018, coming off a $2 million loss in the prior comparable period.

The half year profit is uncommon for the seed company that has traditionally reported interim losses on account of the seasonality of its business.

SeedCo previously incurred losses of $9,29 million, $5,57 million and $7,63 million in the comparable periods in 2016, 2015 and 2014, respectively.    

Morgan Nzwere, the group’s chief executive, attributed the early profits to “early maize seed sales under public support initiatives for agriculture sold at prior year prices”, as well as “better pricing for wheat seed”.

“This was despite the low volume sold as more certified wheat seed was sold compared to more standard grade seed sold last year,” Nzwere told an analysts briefing in Harare yesterday.

Turnover increased by 82 percent after Maize seed sales volumes increased by 115 percent.

Wheat seed sales volumes, however, decreased by 15 percent.

The group had a profit from discontinued operations of $63 million, which mainly arose from the fair valuation of SeedCo International prior to its partial disposal to the shareholders of the group.

This put the total profit after tax for the period at a staggering $69 million.

During the period, the group partially unbundled a wholly-owned subsidiary, SeedCo International, which resulted in a reduction in the group’s shareholding to 26,1 percent at the reporting date. SeedCo International was therefore accounted for as an associate.

“Gross margin improved slightly owing to better product mix while finance income doubled due to interest earned on Treasury Bills held,” the company said in a comment accompanying the group’s financial statements.

SeedCo international narrowed its loss for the period benefiting from exchange gains on foreign denominated receivables in Zambia driven by the Kwacha depreciation.

Quton maintained its prior year profit after being contacted to supply cotton seed on the government’s input programme for the second year running.

Prime SeedCo slightly reduced the previous period’s loss for the year to date as increasing sales and margins were largely offset by staff retrenchment costs.

The company said stock levels are higher versus the last year end due to seed deliveries of current year’s production by growers in preparation for the selling season in the second half of the year.

There, however, is uncertainty on the second half performance owing to the prevailing economic environment.

“The full year performance is likely to be impacted upon by the economic turbulence prevailing in Zimbabwe,” the company said.  

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