Seedco uncertain of seeds demand
Seedco International Limited anticipates uncertain demand of seeds in the next season as the bumper harvest achieved by farmers in this ongoing harvest season may weaken prices.
In the year ended March 2021, the group recorded 83.3 percent increase in profit after tax to US$ 11.1 million compared to U$ 6.1 million recorded last year. Commenting on the published results, Group Chief Executive Officer, Morgan Nzwere said the food security is expected to remain high on the agenda as long as the pandemic endures. “However, the regional bumper harvest expected from the ongoing harvest season may weaken maize grain prices though the potential impact on next season’s seed demand is still unknown.” Nzwere said this financial year was marked by the advent and rapid spread of COVID- 19, both globally and regionally but the Group was spared the worst effects of the pandemic due to its essential business status as an agricultural entity in its multiple jurisdictions. “The Group’s selling season witnessed above average rainfall across most countries, which drove seed demand together with firm maize commodity prices and stakeholders’ support towards food security in the wake of the pandemic.” During the year, the group revenue increased to US$ 88 million due to heightened seed demand on the back of favourable weather conditions, attractive maize grain prices and government, quasi- government and non- government food security initiatives. However, gross margin remained unchanged while other income declined significantly as the massive exchange gains recorded last year did not recur.
Nzwere highlighted that the Group’s much improved cash generation resulted in a reduction in borrowings and associated finance costs. Associate and joint venture contribution remained negative, mainly attributable to product shortages.
“The Group’s profit performance improved markedly spurred by robust revenue growth and interest cost savings.” The company indicated that non- current assets increased due to capital expenditures focused on future rental cost savings and enhancing seed production efficiencies as well as capitalisation of an associate. “Receivables grew on account of increased sales although at a much slower rate due to impressive collections. Included in receivables is $ 17.1m due from related parties of which $ 7.5m was settled post year end. The Group’s gearing ratio declined due to the aforementioned borrowings reduction.”