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Nelson Gahadza
Senior Business Reporter
SeedCo International Limited (SCIL), listed on the Victoria Falls Stock Exchange (VFEX), says it remains optimistic about the prioritization of primary food production in Africa to mitigate global shocks.
This comes as global supply shocks and imported inflation have remained elevated, further compounding the effects of climate change in Africa.
SCIL, also listed on the Botswana Stock Exchange (BSE), has a presence in Botswana, the Democratic Republic of the Congo (DRC), Ghana, Kenya, Malawi, Mozambique, Nigeria, Rwanda, South Africa, Tanzania, and Zambia.
Opening of new business in Angola, Ethiopia, and parts of West Africa are underway.
“Further, the group is restructuring both its business model and balance sheet to respond to the rising cost of doing business and to hedge against weakening currencies,” the group said in its financials for the year ended March 31, 2023.
During the year under review, the performance was mixed, as evidenced by record business growth in some markets and depressed performance in other units.
SCIL also suffered a loss of value from exchange losses as regional currencies depreciated against the United States dollar.
“Despite achieving business growth that is testimony to brand resilience, external factors mainly caused exchange losses rather than business growth gains and reduced the group’s profitability,” SCIL said.
Revenue for the year increased to US$103.5 million, up 16.95 percent from US$88.5 million the prior year, buoyed by good volume performance in East Africa as well as Zambia.
Margins were, however, under pressure from imported global inflation that could not be passed on in pricing to small-scale farmers.
“Other income reversed significantly into negative territory, driven by exchange losses as regional currencies weakened against the USD.”
Overheads for the year under review increased in line with business growth in East Africa and in response to global inflation developments.
However, the group’s cash generation remained positive, but at a lower level compared to the prior year.
The company said borrowings and finance costs increased due to capital expenditure and working capital growth.
“Associate and joint ventures’ negative contribution increased largely on account of exchange losses, while net profit declined mainly because of exchange losses of US$4.5 million.
The group’s non-current assets decreased due to the impact of depreciating regional currencies, while the carrying value of investments in associates and joint ventures reduced due to forex-induced losses.
SCIL said receivables increased mainly due to the growth in business this year.
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