Seed Co revenue rises:
SEED CO’S revenue for the half year to September 30, 2017 jumped 45 percent to $36,1 million from $24,8 million in the same period prior year on early maize seed sales and improved winter cereal seed sales.
Maize seed sales volumes rose 34 percent while winter wheat cereals went up 251 percent following the launch of the command winter wheat production in the country.
The seed manufacturer subsequently narrowed loss after tax for the period to $2 million from $9,3 million in the same period last year on the back of an increase in sales and a decline in finance costs.
Finance costs decreased from $2,1 million to $1,3 million as the group reduced its borrowings by 28 percent to $32,9 million.
Gross margins rose 9 percentage points to 49 percent. Operating expenses rose 27 percent due to increased research activities at Muzarabani and Potchefstroom research stations as well as increased marketing activities.
Meanwhile, trade receivables increased to $43,2 million from $38,02 million due to high winter cereal sales despite cumulative collections of $38 million.
Inventories decreased to $42,54 million from $48,26 million with management explaining that the stock levels are up due to deliveries of current year production by growers in preparation of the selling season in the second half of the year.
Group finance director John Matorofa said the anticipated high demand for the current selling season may lead to a stock sell out position in the group “though this will be mitigated by moving inventories between subsidiary companies to ensure that seed is available in the appropriate market”.
Seed Co also has operations in Botswana, Kenya, Malawi, Nigeria, Rwanda, Tanzania and Zambia and plans to list its regional operations on a regional stock exchange.
In the outlook, the company expects a stable set of earnings due to continued market share growth in key markets, particularly East Africa as adoption of its hybrids in that region is on the rise.
This is also due to continuing input programmes in Zambia, Zimbabwe and Malawi.
“The bumper maize harvest recorded in Zambia and Malawi has, however, led to a subdued commodity price for grain, and it is not yet clear what the overall impact on the demand of seed will be in these markets, but we expect it to remain steady.
Seed Co also gave an update on its regional operations saying the group got a lion’s share of the government business in Zimbabwe resulting in a near stockout position.
Plans are however underway to import the shortfall.
Early sales in the country also resulted in the operations posting a profit as compared to a loss last year.
In Zambia, a stable Kwacha reduced the exchange losses by more than 60 percent as compared to last year while in Malawi the government subsidy programmes were maintained at the same levels as prior year.