adminEnacy Mapakame
Seed producer, Seed Co Limited’s sales volumes for the first quarter to June 30, 2020, rose by 45 percent from the corresponding period last year on increased Government support for winter wheat production.
Of total sales during the review period, wheat seed and barley accounted for 91,6 percent and 8,1 percent respectively.
According to Seed Co, wheat seed sales volumes were 56, 5 percent higher than prior year on the back of improved irrigation capacity, which benefited from rising water levels and better electricity supply.
“In addition, the Government’s commitment to reduce imports by supporting local production of the crop contributed to the positive sales performance,” said the group in a trading update for the period under review.
Zimbabwe is looking at producing 400 000 tonnes of wheat annually in a move aimed at ensuring sufficiency. This year there has been a significant increase in hectares planted under winter wheat to 80 000 hectares compared to 24 186 hectares planted last year.
However, barley seed sales volumes went down by 20,3 percent compared to the previous year as the major customer cut back its seed uptake for malt production in response to reduced beer consumption arising from constrained customers’ disposable income and the Covid-19 lockdown. The country was already experiencing economic headwinds such as foreign currency shortages and high inflation resulting in low disposable incomes.
On financial performance, the first quarter is mainly a cost-accumulation phase in preparation for the main maize seed selling season in the second half of the financial year.
Revenue for the quarter grew by 1 097 percent in historical cost basis compared to same period last year, which is indicative of the inflationary selling price increases and volume growth. However, the turnover increase in inflation-adjusted terms was a relatively modest 80 percent.
Operating profit rose by 577 percent in historical cost terms and by only 28 percent after factoring in IAS 29 adjustments as the revenue growth was partially offset by the hyperinflation-driven operating costs.
According to the group, the share of loss from the foreign associate widened as its US$ denominated loss was translated at a weaker exchange rate.
The average local dollar/US$ exchange rate depreciated from 5, 05 for the quarter ended 30 June 2019 to 35, 79 for the quarter under review.
The average index used for the restatement of the historical cost income statement for the quarter was 1,165.4 versus 172.6 for the corresponding period last year and these translated to average conversion factors of 0, 72 and 4, 70 respectively.
Going forward, the performance of the general economy will have an impact on the group’s operations.
Already, the obtaining economic challenges in Zimbabwe, which are exacerbated by the Covid-19 pandemic that is also ravaging the group’s other regional markets, makes it difficult to predict the outlook.
But measures have been put in place for business sustainability.
Said Seed Co: “To mitigate against the effects of the pandemic, the group developed and activated a Business Continuity Plan that is aligned to the essential services nature of the group’s business. In addition, the group’s strategic position at the base of the food value chain, and the concerted effort by the Zimbabwean government, regional governments and other key stakeholders to ensure food security is expected to help the group’s performance remain resilient in the circumstances.”
Meanwhile, despite funding constraints, the group is soldiering on to commission its US$12,5 million artificial seed drying facility.
Online Reporter