daniel chigunwe
Business Reporter
Regional seed producer Seed Co International says it will leverage strong demand in its international markets to drive a solid performance for the financial year 2024.
These include the East African markets, which are projected to receive normal to above-normal rainfall during the current farming season.
According to the group, the region has already shown resilience with strong demand seen in Zambia, Tanzania and Kenya, which are receiving good rains.
The region has also experienced product stockouts during the half-year period to September 30, 2023.
This is in contrast to parts of Southern Africa, including Zimbabwe, which are projected to have below-normal rainfalls, because of the El Nino weather phenomenon.
“We expect good performance in international business where the rain is pouring, unlike in Zimbabwe where farmers are not certain,” group chief executive Morgan Nzwere told an analyst briefing last week.
The group is optimistic that it is well prepared to respond to the varying needs of farmers during this season given its diverse climate-smart product portfolio.
A combination of volume growth and better product mix boosted revenue performance for the business in the half year compared to the comparative period last year.
Mr Nzwere added that the encouraging first-half maize sales were booked in Kenya, Malawi, Mozambique, Tanzania, and Zambia, buoyed by firm grain prices in the region and globally.
Total seed volumes grew 16 percent year on year to 13 870 metric tonnes, buoyed by an 18 percent increase in maize seed volumes, which constituted 86 percent of the total.
This volume growth boosted revenue by 23 percent to US$31,3 million from US$25,5 million in the first half of 2023.
The group restructured its borrowing to purge US dollar liabilities to manage elevated foreign exchange risks following local currency devaluation across the region.
However, higher interest rates on local currency borrowings more than doubled net finance costs from US$1,4 million in the prior year to US$3,4mn. Moreover, foreign exchange losses drove contributions from associates to a loss of US$1,4 million from US$0,5 million in the 2023 first half. As a result, the group closed the period with a loss of US$3,9 million, a 9 percent improvement from the US$4,3 million loss in the prior year comparative period.
While the group will benefit from strong demand in East African markets, market watchers opine the projected dry weather patterns in parts of Southern Africa will weigh on the business.
“The ongoing El Nino phenomenon will play into depressed sales for the remainder of the year in the Southern African markets that are forecast to experience below normal rains this summer,” said IH Securities.
The regional seed processor is dually listed on the Botswana Stock Exchange and the Victoria Falls Stock Exchange (VFEX).
Its operations are spread across Angola, Botswana, the Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Kenya, Malawi, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, and Zambia.
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