Zimbabwe’s biggest seed producer, Seed Co Limited defied the effects of El Nino experienced in the year to March 31, 2016 by posting a 3 percent increase in annual profit to $15,4 million from $15 million the previous year.
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.
“Despite the challenges the group managed to grow both its revenues and profitability,” said Seed Co finance director John Matorofa while making a presentation at the company’s analyst briefing last Thursday.
Gross margins for the period increased across the board going up 7 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 about $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.
The group’s accounts receivables reduced 10 percent due to Government business being done through financing structures and improved debt collection efforts. Out of the $42,2 million trade receivables, the Governments of Zambia, Malawi and Botswana owe the group $14 million which is expected to be settled before the end of the first half of the year.
Seed Co chief executive Morgan Nzwere said the group has made significant progress in increasing the irrigation capacity of its key seed growers, resulting in improved yields and lower cost of seed.
“There is now adequate capacity to produce enough seed to meet increased market demand in Africa. Four maize varieties were released.
“The new technology laboratory is now functional and a pathologist has been appointed to co-ordinate all green house and lab activities in support of field research,” said Mr Nzwere.
Going forward Mr Nzwere said the number of families expected to go without enough food is expected to spur some humanitarian demand for seed, as well as increased Government input programmes.