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Enacy Mapakame
Listed seed producer Seed Co Limited is looking to increase exports and bolster its US dollar-denominated sales, which will boost its foreign currency earnings.
Despite the uncertainties in the Zimbabwe market due to bad weather forecasts for the current farming season, Seed Co expects to leverage its regional operations that have already shown a promising start to the season.
The regional associate, Seed Co International, registered good volume and turnover performance for the half year to September 30, 2023, which resulted in reduced loss compared to the same period in the prior year.
“Despite the harsh and uncertain operating environment, the business is committed to remaining the most preferred as well as trusted producer and supplier of improved crop seeds,” said group secretary Mr Tineyi Chatiza.
“Going forward, the business is focusing on increasing the contribution of exports and USD-denominated sales as well as pricing right while maintaining costs.
“The regional associate business is poised to continue the growth trend established in the first half leveraging on its diversified geographical footprint and climate-smart products to respond to the favourable and unfavourable El Nino conditions in East Africa and Southern Africa,” he said.
Indications from the seed processing firm are that regional operations in countries like Zambia, Tanzania, Malawi and Kenya are experiencing stock-outs and prospects remain bright due to good rainfalls.
Speaking at an analyst briefing, group chief executive officer Morgan Nzwere added the group was also angling to benefit from increased distribution. As part of initiatives to increase reach to the market, the group has opened its retail outlets enabling them to access US dollar sales directly from the market.
“We have had traction in these shops until now due to the dry weather pattern being experienced in Zimbabwe. Our US dollar sale has helped the business cushion against seed losses.
“We think we will still have a decent profit or loss, but the volumes will be lower than the prior year unless the situation improves in terms of weather,” he said.
During the half-year period, turnover jumped 121 percent on the prior year on price adjustments due to inflationary pressures and comparative exchange rate movements.
Due to inflationary pressures and exchange rate volatility, overheads rose 181 percent compared to the prior year period.
In terms of volumes, the business registered an 8 percent growth in winter wheat and barley sales of 6,828 tonnes despite a myriad of challenges experienced by farmers.
On the other hand, the summer selling season started slowly mainly because of the late start of Government related input support initiatives. As a result, maize sales volumes reduced by 22 percent when compared with prior year.
Gross profit notched up 58 percent compared to 54 percent in prior year benefitting from price reviews.
Online Reporter