Seedco downbeat over volume decline
SEED manufacturing giant, Seed Co Limited, is downbeat of its sales volumes for the current financial year due to a host of economic challenges currently obtaining, key among them infl ationary pressures resulting in waning disposable incomes.
Already, Seed Co has recorded depressed volumes for its half year to September 30, 2019, as volumes went down 46 percent on the back of non-recurrence of early maize seed sales made in the comparative period. On the positive the group, however, swung back to the black posting $34,4 million profit for the half year from a $29,1 million loss in the same period last year.
“The outlook remains highly unpredictable due the current harsh economic environment. Th e company’s sales volumes are expected to close the current financial year lower than prior year due to challenges (in the economy)” said Seed Co in a trading update for the third quarter and nine months to December 31, 2019.
For both the third quarter and nine months period, Seed Co Limited, experienced a reduction in sales volumes as the market continued to battle an array of economic challenges such as waning disposable incomes together with unfavourable weather forecasts.
During the third quarter, volumes fell 3 percent, while for the nine months the decline was 24 percent compared to same period in the prior year.
According to the seed making giant, Government also reduced its seed uptake. Government is a key customer for seed making fi rms to sustain its various projects such as the Presidential Input Scheme and Command Agriculture.
“The reduction in sales volumes in both the 3rd quarter and 9 months was mainly due to low onset of the season and unfavourable weather forecasts, which discouraged farmers from purchasing seed, negative impact of low disposable income (and) reduced Government uptake of our seed,” said the group.
The country has also been battling energy challenges, which had a knock on effect on the agriculture sector.
Farmers across the country were also affected by fuel shortages that hampered land preparations for the current season, while erratic electricity water supplies also incapacitated wheat farmers from growing the crop under irrigation.
Meanwhile, the group is continuing with its project for construction of a state of the art artifi cial maize seed drying plant at its Stapleford complex.
Seed Co indicated the construction work was progressing with equipment already delivered from Denmark although progress in construction is slower than originally anticipated due to funding challenges.
Despite the economic challenges, Seed Co is one of the stocks projected to survive the turbulence due to the strategic nature of its product while foreign exposure through its regional investments will also add to its allure.
“The company will also bank on its regional associate investment, Seed Co International Limited for real capital preservation and earnings,” said Seed Co.