Seed Co to cut production by 60%
http://www.theindependent.co.zw/
August 31, 2012 in Business
SEED CO Ltd is this year set to reduce production by nearly two-thirds due
to carry over stock from last year, according to CEO Morgan Nzwere.
Gamma Mudarikiri
Nzwere told shareholders at an annual general meeting this week the company
would cut seed production to 24 000 tonnes compared to last year’s 64 000
tonnes, a move aimed at clearing carry-over stock. “Closing stocks by
year-end will be reduced by 47% as compared to prior year,” he said.
This, however, comes after the company early this year anticipated to
produce 68 200 metric tonnes of seed for 2012/13 in correspondence to the
market size.
Apart from carryover stocks, the company had been set back by debtors,
particularly government, which had however committed to pay the US$13
million it owed the company by end of this August. Payment by other debtors,
who owe the company US$16 million, was slow due to the persistent liquidity
challenges, Nzwere said.
Seed Co was striving to reduce borrowings in the current financial year to
US$40 million, compared to US$44 million in the year ended March 31 this
year. Borrowings in the year March 31 2012 had doubled to US$44 million to
fund carryover inventory. This resulted in net finance costs going up 70% to
US$4,33 million from US$2,92 million the previous year.
The Seedco group recorded a 20% rise in turnover to US$117 million in the
year under review, helped by a 22% increase in sales volumes to 67 240
metric tonnes.
In terms of contribution by market, Zimbabwe brought in 38% to turnover,
Zambia 23%, Malawi 10%, East Africa 9%, Botswana 7%. Cotton seed producer
Quton contributed 13% to group turnover.
Zimbabwe sales volume grew 74% as the group fought to increase market
coverage, taking into account the abundant viability of stocks. Nzwere said
the company’s market share in Zimbabwe remained flat at 70%, Zambia 51%,
Malawi 50%, Tanzania 46% and Kenya 10%.
The group reported a net profit of US$19,08 million, an increase of 10% in
the comparable period, while earnings per share also grew 10% to 9,90 US
cents.
Nzwere said a new seed processing plant was currently being installed in
Kenya while an acid delinting plant was also being installed in Malawi and
Tanzania.