daniel chigunwe
Business Reporter
Seed Co Limited’s overall sales volumes for the year to March 31, 2024, were nearly a third lower than the prior year because of the El Niño-induced drought, which negatively impacted maize and soya seed sales volumes.
According to its FY2024 financials, the company said the extensively publicised drought dampened cropping plans as farmers cautiously tried to curb the risk of crop failure because of moisture stress.
“Sales volume of the flagship crop, maize seed, was below the prior year by nearly a third,” the company said.
“On the other hand, export sales increased, notably earning the business much-needed foreign currency while at the same time reducing the impact of lower local demand for seed,” reads the financials in part.
During the year under review, Seed Co. said wheat sales volumes remained constant in comparison to the prior year despite challenges experienced by farmers, which included power cuts, high prices of key inputs like fertiliser, and exchange rate volatility.
Group revenue for the year under review dropped by 10 percent as a result of low sales volume performance.
The group’s other income increased due to exchange gains on USD-denominated receivables and an increase in non-seed sales.
“Operating expenses surged due to the current hyperinflationary environment as the pricing index to the USD became the norm,” reads the financials in part.
During the year under review, finance costs accounted for 16 percent of turnover, down from 26 percent the previous year.
The company noted that it remained reliant on borrowings to fund the cash flow gap created by the delayed settlement of government-related receivables and the inflationary increase in operational costs.
It highlighted that the average interest rate year-on-year was 90 percent per annum (pa) compared to 112 percent pa in the prior year.
The group’s profit share from the joint venture and associates was $25,78 billion, benefiting from Seed Co. International’s notable profitability recovery as well as the exchange gain-anchored profitability of the local joint venture, Prime Seed Co., and associate, Quton.
“Despite the subdued volumes, the company’s profitability improved 8 percent from the prior year, mainly driven by exchange gains from revaluing USD denominated receivables,” the company said.
However, the business maintains cautious optimism regarding Zimbabwe’s economic outlook despite prevailing challenges.
It said the agricultural sector, a vital economic driver, is expected to improve with anticipated favourable weather conditions as El Niño transitions to La Niña in the upcoming season. As a result, moving forward, the company will focus on increasing the contribution of exports and USD-denominated sales while ensuring competitive pricing and effective cost management.
The group also noted that it will continue to leverage its intellectual property by continuing to offer an optimal mix of seed varieties suitable for both drought and favourable rainfall conditions.
Online Reporter
Bongani Ndlovu