adminthe end of July.
The group controls 49 percent of Olivine.
Its main constraint has been the lack of adequate working capital, which has led to low production and stagnant sales volumes.
Aico posted a commendable US$18,6 million net profit for the financial period ending March 31, 2011.
It said the funds would be used to finance working capital and retire expensive debt.
The conglomerate has shelved plans for a US$50 million rights offer. It now intends to harness internally generated cash flows from anticipated strong performance and possible long-term debt.
The rights issue was equivalent to half of its market capitalisation, which could be one of the reasons why shareholders developed cold feet on the back of biting liquidity challenges.
“Subject to a timely injection of capital, this business will record a profit in the new financial year,” the company said a statement. “We are therefore, excited about the prospects of this business going forward.”
The FMCG division registered low margins and high operating costs which resulted in a loss before profit of US$4,5 million.
Aico has a volatile earnings stream due to the seasonal variability of dryland cotton production and unpredictable lint prices on world commodity markets.
Aico is valued at about US$100 million on the Zimbabwe Stock Exchange.
It turned over US$210 million in the 12 months on account of firmer commodity and sales prices during the period.
But group performance was negated by the FMCG business and discontinued operations, which recorded losses of US$4,5 million and US$1,1 million, respectively.
Group profit from operations of US$33,2 million grew 160 percent over the comparable year with profit before tax going up 311 percent to US$20 million.
Aico said the national cotton crop for the year improved to 268 000 tonnes from 210 000 tonnes last year.
Cottco’s intake volume also improved to 111 075 tonnes compared with last year’s 98 091 tonnes, representing a growth of 13 percent for the period.
Cottco invested US$11,7 million in inputs during the period under review, resulting in high crop intake volumes.
Seed Co sales volumes increased across all the seed business units, realising a growth in overall sales volumes of 15 percent to turn over US$98 million.
Scottco, in which the conglomerate is in the process of offloading, saw yarn prices significantly lagging behind lint prices for most of the year.
This mismatch in prices made marketing of yarn a problem.
Aico holds a controlling 75 percent stake in Scottco.
The group is also in the process of disposing of Exhort Enterprises and Salamax Trading because they had become “a burden” to the group.
The National Social Security Authority owns 18,8 percent of Aico, along with other shareholders Zimre Holdings (17,2 percent) and Waughco Nominees (12,4 percent).
Online Reporter