AICO posts US$5m half-year loss

turning over modest revenues of US$115 million.
Finance costs amounted to US$13,7 million for the six months and total non-current liabilities amounted to US$33,7 million.

Capital expenditure for the group during the six months amounted to US$13,4 million.
Group chief executive Mr Pat Davenish said the business was affected by working capital shortages during the period. The spinning business was also debilitated by unfavourable market conditions.
Cotton uptake fell to 103 224 tonnes from 111 075 tonnes last year due to a smaller national crop size but revenue was US$80 million due to higher selling prices.

He said seed production was up 17 percent due to increased production in East Africa – demand for seed has also remained high.
“Liquidity constraints characterised by lack of much needed medium- and long-term financing has continued to affect growth of business. Power shortages have also remained unresolved,” said Mr Davenish.

AICO is optimistic on the recovery of its FMCG business led by Olivine Industries that has so far been capitalised to the tune of US$4,5 million.
Initially, shareholders proposed a US$15 million injection into operations.

Mr Davenish said US$7,5 million equity is expected into the company by January next year, US$1,6 million being AICO’s portion and the remainder from partners.
The group is also expected to pump in US$3 million towards production of soyabeans, through contract farming to support Olivine Industries currently operating between 20 and 30 percent.

Finance director Mr Bernard Mudzimuirema said the FMCG business is expected to return to profitability by the full year to 2013.
“We have to resolve funding problems and capital structures to turn to profitability. We are looking forward to this investment improving operations and profitability,” said Mr Mudzimuirema.

The group is struggling to sell off its two loss-making operations, Exhort and Scottco.
AICO owns 100 percent of Exhort. Mr Davenish said they are now close to concluding the sale of the business. Initially, the price of the business was set at US$2,5 million.

Mr Mudzimuirema indicated that local bidders failed to get support from local financial institutions and they had to settle for other investors who were offering lower prices.
Mr Davenish said that if they fail to find a buyer they would be closing down the business.

“If we cannot sell the business, we are going to close it,” said Mr Davenish.
AICO controls 75 percent of Scottco.

The group is the holding company of the Cotton Company of Zimbabwe, Zimbabwe Stock Exchange-listed seed firm Seed Co and Olivine Industries established in 1931.