Michael Tome Business Reporter
Zimbabwe’s largest seed producer, Seed Co Limited posted an 11,14 percent growth in operating profit to $24 million for the year to March 2019 from $22 million reported in the prior comparable period.
The group recorded a 16 percent revenue growth to $73,4 million from the $63,4 million realised in the same period last year.
Profit before tax grew to $28 million up from $24 million translating to a 15 percent improvement from the previous year mark.
The results were achieved despite a widely publicised drought that dampened seed purchases by farmers.
Diluted purchasing power due to inflationary pressures also affected the group’s maize sales during the period because consumers did not have money to buy seeds.
However, better pricing for wheat seed, record soya seed sales and mixed price adjustments to mitigate local inflation were credited for the seed company’s remarkable turnover.
Crop volume contribution saw maize dominating by 59 percent although it was a 12 percent decline in volumes uptake to 15 800 tonnes from 18 000 tonnes realised last year.
The group recorded a 3 percent increase in other crops volumes uptake as soya bean recorded a 9, 5 percent growth to 4 600 tonnes from 4 200 tonnes reported in the prior comparable period.
Wheat and barley’s contribution was stagnant at 21 percent although the tonnage dropped by 500 tonnes to stand at 5 700 tonnes from 6 200 tonnes in 2018 financial year.
Total volumes were down 7 percent.
Seed Co limited group chief executive officer Morgan Nzwere, acknowledged the remarkable soyabean performance.
“The demand for soyabean has been high this past season. We have been selling way below 2 000 tonnes but the figure jumped to over 6 000 tonnes last year and still the demand for soya is high despite the rising prices,” said Mr Nzwere.
Treasury Bills, the Reserve Bank of Zimbabwe Savings Bond and short-term investments interest income also bolstered Seed Co’s income.
Increase in profit from continuing operations stood at US$21,5 million compared to US$17 million due to $1,2 million increased contribution from associates and joint ventures and once more the increased sales volumes on soya and wheat.
Overall gross margin slightly decreased due to swelling input costs, which were more than selling prices because of increased cost of seed production.
The group managed to pay off most of its local creditors and bank borrowings. However, remittances for foreign obligations remained lodged with the bankers pending repatriation on availability of the required foreign currency.
The company’s operating costs were contained across the value chain despite overwhelming inflationary pressures.