admin
Enacy Mapakame
Business Reporter
Regional seed producer Seed Co International is upbeat about growth prospects banking on the region’s need to meet food security while mitigating the adverse impacts of climate change as well as global shocks.
The world was plunged into supply chain disruptions due to the war in Ukraine posing a threat to food security as the cost of production also escalated.
This is coupled with the adverse impacts of climate change, which the group seeks to tackle through the production of drought-resistant and early-maturing seed varieties.
This comes as global supply stocks and imported inflation remain elevated, further compounding the effects of climate change in Africa.
“There is talk about El Nino weather phenomenon coming, and we have to structure ourselves properly and come up with early maturity varieties in the face of the projected limited rainfall,” group chief executive officer Morgan Nzwere told an analyst briefing earlier this week.
Management also remains optimistic about maintaining good performance buoyed by prioritisation of primary food production in Africa to mitigate the global shocks.
Meanwhile, revenue for the year to March 31, 2023 jumped 20 percent to US$103,5 million from US$88,5 million recorded in the prior year as volume performance in East Africa and Zambia remained good.
The Victoria Falls Stock Change (VFEX) listed group was however not immune to the other challenges experienced across the region characterised by currency volatility which had a knock-on effect on profitability.
Profit for the year went down to US$2,9 compared to US$7,1 million in the comparable year due to exchange rate losses. Basic earnings per share went down to US0,73 cents from US1,8 cents in the comparable year.
“The business incurred exchange rate losses compared to gains in the prior year mainly because of the Zambia and Kenya markets that experienced a significant swing in exchange rate towards the end of the year,” said group finance director Mr John Matorofa.
Gross margins remained flat and faced pressure from imported global inflation that could not be passed on in pricing to small-scale farmers.
Resultantly, Mr Matorofa said the group is reconstructing its business model and balance sheet to respond to the rising costs of doing business which will also help to hedge against weakening currencies in the region against the US dollar.
“We are changing the structure of the business and borrowings, we are localising borrowings going forward,” he said.
During the period, non-current assets decreased due to the impact of depreciating regional currencies. The carrying value of investments in associate and joint ventures reduced due to foreign currency-induced losses
Due to exchange losses, other income was also reversed during the review period.
Overheads increased in line with business growth in East Africa and in response to global inflation developments.
The group’s cash generation remained positive but at a lower level compared to prior year.
Online Reporter