Seed Co realised $16 million revenue in the half year to September, seven percent down on the same period last year but the company expects turnover to bounce back on increased maize seed sales with the onset of the rain season.

Winter cereals were 25 percent lower than the same period last year but the company recorded a six percent growth in maize seed sales on prior year.

Maize is Seed Co’s core business.

The group recorded a loss after tax of $7,6 million, 40 percent lower than in the same period last year. The largest seed production house expects to rebound in the second half boosted by improved margins in all markets from minimal stock write downs and price increases.

Seed Co has operations in 15 African countries and the group expects $15 million to $20 million to group annual turnover and about $3 million to total profits from its Malawi operation.

The company commissioned a new $10 million facility in Malawi this week.

Group chief executive officer Mr Morgan Nzwere told an analyst briefing yesterday that Malawi ginners are placing “good orders” for the coming year.

The ginners are also paying what they owe. Seed Co wants to divest from cotton with an Indian seed manufacturer, Mahyco, having expressed interest in taking over 60 percent of the cotton businesses in Zimbabwe, Malawi and Tanzania.

The company wants to be out of the cotton business within the next two years.

“We have obtained all the regulatory approvals that we needed in terms of the Zimbabwe business. We are still waiting for approvals in the Malawian and Tanzanian businesses.

“These are separate subsidiaries in those entities and we have to get similar approvals. We think that by mid-December everything should be more or less finalised,” said Mr Nzwere.

Seed Co’s intention is to sell 60 percent of the three businesses and in two years be out of the problematic sector.

“It’s an industry that’s going to cause some serious pains and we think our strategy to bring in a partner to reduce our risk is the correct strategy,” said Mr Nzwere.

The cotton business is struggling in Zimbabwe with lint prices depressed while yields are growing smaller each season.

On the Government debt, Seed Co has been offered a combination of Treasury Bills and tax set offs to clear the $34 million state liability.

“The Government was owing about $34 million and gave us Treasury Bills worth about $24 million and said $10 million you can use tax settlements. To date we have already done tax set offs of about $5,6 million,” said Mr Nzwere.

The group is focusing on the Katanga province in the Democratic Republic of Congo which has the same population of Zambia.

In the Zambia, the group is realising profits upwards of $7 million and expects more or less the same levels of profits in DRC’s Katanga province.

Mr Nzwere said that the province could end up being one of the group’s biggest contributors. The second tranche of $27 million from Limagrain is expected in December and this will help reduce finance charges.