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Enacy Mapakame
The country’s biggest seed producer Seed Co Limited says Zimbabwe and continental food security will remain top of its agenda in the face of global supply shocks.
Speaking at an analyst briefing held yesterday, group chief executive officer Mr Morgan Nzwere said the group’s focus is on mitigating global supply shocks as African governments activate import substitution local production strategies.
He said the group is “better positioned to leverage the strong brand and intellectual property to actively contribute to primary food production to plug supply gaps.”
Mr. Nzwere said while economic uncertainties are to persist in the near future due to exchange rate volatility, management remains upbeat about meeting demand and increasing contribution to food security in Zimbabwe and across the region.
Meanwhile, Mr Nzwere said the firm was working on establishing its own selling depots to increase product availability as the group seeks volume recovery following a 20 percent decline during the year to March 31, 2022.
Mr Nzwere told analysts that this would allow the group to make direct cash sales while also renegotiating distribution agreements to ensure it earns and collects real value from the sale of its products.
This comes as total Zimbabwe annual sales volumes were 5 838 tonnes, which was 20 percent lower than prior year because of pricing challenges that hamstrung the normal plan to place seed in the market as well as late rains which impacted seed uptake.
The group also experienced reduced export opportunities as the regional markets also experienced erratic rains.
Maize remained the flagship seed crop accounting for 53 percent of total volume although it went down by 23 percent to 12 519 tonnes during the year under review.
The decline was a result of pricing confusion at the start of the season with late rains affecting planting both in Zimbabwe and in the region (reduced exports). Wheat sales dropped by 6 percent only despite a non-repeat of exports (2 000 tonnes exported to Nigeria in FY21).
Soyabean volume dropped 31 percent because of erratic rains and pricing challenges while associate Quton recorded a 7 percent decline in cotton seed.
The general environment during the period was characterised by an unstable economy highlighted by hyperinflation and currency erosion not helped by pricing distortions due to countless market developments.
“De facto monetary and fiscal regulations not in sync with the controls arising from exchange rate disparities affecting the ease of doing business viably
In terms of financial performance, revenue declined 8 percent as volume on reduction due to late rains and pricing confusion in the market.
Profit before tax was $0,6 billion, a significant reduction from prior year’s $1,9 billion despite a significant monetary loss decline from $3,3 billion to $1 billion.
According to group finance director John Matorofa, profit before tax was reduced due to margin shrinkage from 64 percent down to 33 percent in a distorted market with de facto price controls.
Associates and joint venture contribution was lower mainly because the continental associate with Seed Co International posted a 35 percent reduced USD profit from US$11,1 million to US$7,1 million in FY22.
Margin erosion against increasing operating expenditure reduced Quton’s profit by 90 percent while Prime Seed had a good year boosted by dollar-denominated sales to non-governmental organisations (NGO) and growing exports to Mozambique.
Mr Matorofa added that the impact of deferred tax on revalued assets reversed the profit before into a net loss of $0,6 billion.
Other income increased when compared to the prior year due to exchange gains on inter-company debtors and non-seed sales such as fertilisers and chemicals.
Operating expenditure rose 15 percent in response to market rate-based purchase prices.
The rise was also partly attributable to payroll-related costs and depreciation on revalued assets and expenses that were billed at market rate instead of the inter-bank rate.
Online Reporter