Cottco records 67% nose-dive in revenue
COTTON Company Holdings Limited recorded a 67% nose-dive in revenue as volumes tumbled due to side-marketing and a lower than expected national crop.
VICTORIA MTOMBA
BUSINESS REPORTER
Speaking at an analyst briefing on Thursday, the company’s head of finance Dacyl-Ray Rambanepasi said revenues were down to $42 million during the period under review compared to $129 million for the year ended March 2014.
“The reduction in revenue is largely attributed to a decline in volumes from the budgeted 110 000 tonnes to actual volumes of 35 665 tonnes which was achieved after having lost significant volumes to side marketing, a lower than expected national crop,” Rambanepasi said.
She said the lower volumes were also a result of reduced national crop size as the lint prices were 11% higher than the previous year.
The group posted profit after tax from continuing operations of $2,6 million from a loss of $9,6 million the same period last year.
The group disposed of its interests in Seed Co and Olivine Industries as part of its unbundling exercise and a total amount of $37,2 million was raised.
The group recorded profit for the year of $14,8 million from a loss of $2 million.
Rambanepasi said the interest costs were high for the group which was heavily dependent on debt.
She said group interest costs went down to $13,4 million compared to $16,1 million the previous year.
The group has high borrowing due to the carry-over of historical debt.
“Interest is expected to reduce significantly as a result of the capital injection,” she said.
Cotton Company of Zimbabwe Limited managing director Collins Chihuri said the company was targeting 190 000 tonnes of cotton for this year compared to
145 000 tonnes recorded in the last season.
The company will break even next year before returning to profitability in 2016, he said.
“The farmer that we now have is not the same as we had before. The challenge with the new farmer is that of integrity,” he said.
Chihuri said the company was mainly affected by side marketing.