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Sifelani Tsiko Agric, Environment & Innovations Editor
SeedCo International Limited (SCIL), a leading African seed producer, delivered a strong full year performance with a reduced but healthy profitability amid challenging market conditions at both local, regional and international levels.
According to a statement released on Thursday, Seed Co International after-tax profits declined to US$7,1 million in full year results to March 2022 from US$11,1 million in the previous period last year due to erratic rains, adverse currency movement and reduced economies of scale lower volumes.
Gross margin shrinkage mainly in Zambia due to the appreciation of the kwacha, reduced economies of scale as volume declines of around 11 percent registered in Malawi, Zambia and Nigeria and an increase in net finance costs largely attributable to rising interest costs all put a dent to Seed Co International’s 2022 performance.
Drought in parts of East Africa which also affected Kenya the most as well erratic rains in Southern Africa – subdued SCIL’s performance.
Company secretary Eric Kalaote said the firm’s revenue performance remained stable despite the challenges.
Despite notable volume reduction, revenue was flat at US$88,5 million anchored by phenomenal revenue growth in Mozambique which trebled to US$11,1 million albeit from lower margin legumes, local currency price adjustments and currency translation gains mainly out of Zambia.
Seed Co International has been expanding on the continent and controls more than half the maize seed market in Malawi and Zambia, 40 percent of the Tanzanian market. It is also testing new maize varieties for sale in Ethiopia and West Africa.
The raging Russian – Ukraine conflict has caused global market volatility which has also affected SCIL’s performance.
“The Ukraine war is causing unprecedented shocks to supply chains giving rise to imported inflation compounding already fragile African economies,” said Morgan Nzwere, group chief executive officer of Seed Co International.
“The war is adding onto existing Covid-19 and climate change induced challenges. Despite the challenges, Seed Co stands to benefit from its vantage position of being at the start of primary food production.”
Going forward, Nzwere said the company would focus more on bolstering winter cereal sales, seed intake and processing, cash preservation and strategic deployment of critical supplies to mitigate supply chain bottlenecks owing to global uncertainty.
SCIL management is upbeat of maintaining a growth trajectory with adequate stocks and competitive product performance.
The group said it will continue with its market development initiatives in East Africa and the adjacent markets of Angola, DRC and Mozambique.
Seed Co International was de-merged from Seed Co Zimbabwe and is listed on both the Botswana Stock Exchange and the Zimbabwe Stock Exchange.
Online Reporter