adminmonths to September 30 2011, weighed down by high operating expenses.
The US$1,4 million was, however, 2 percent lower than a loss recorded in the previous period on increased cotton and maize seed volumes, Seed Co said in its half-year financial statement yesterday.
Turnover was up 49 percent to US$30 million and this was largely driven by high winter cereal sales in Zimbabwe and Zambia and improved cotton exports to Malawi. Operating expenses were up 23 percent to US$11,8 million.
The balance sheet grew to US$146 million from US$123 million in the prior year while bank borrowings almost doubled to US$45 million.
The group should be able to reduce its debt when the selling season commences in the second half of the year.
“The business model of Seed Co is seasonal. It has made a loss since it has been accumulating high costs in the first half but the bulk of its sales will come in the second quarter and it should be able to return to profit,” said a Harare investment analyst
With adequate stocks, the group is forecasting real growth in earnings this year.
The cotton and maize divisions in Tanzania are also expected to start contributing significantly to the group’s profits. Seed Co will also take advantage of its status as the only certified seed cotton developer in the Southern African region to expand its market.
“With adequate stocks on hand, the group is well positioned and ready to meet seed demand in all markets,” said Seed Co. All the major markets now have significant seed supplies. New markets like Tanzania and Kenya are now fast developing their own production capacity.
The group said a pilot seed production conducted this year was successful.
The group will continue to strengthen collaborative activities with various organisations towards identifying suitable varieties for West Africa and East African Highlands while “the group is making
impressive progress towards releasing more drought stress resilient varieties”. Seed Co lost US2c to US115c at the close of yesterday’s trading.
Online Reporter