Seed Co group chief executive Morgan Nzwere (left) and group finance director John Matorofa share a lighter moment during the company’s analyst briefing yesterday
Business Reporter—
ZIMBABWE Stock Exchange-listed Seed Co Limited is targeting a 20 percent increase in seed production on the back of anticipated improved demand for the 2017/ 18 selling season. Seed Co group chief executive Morgan Nzwere said another season of good rains was anticipated in the firm’s main markets, which he contends would spur demand for seed.
“The Command Agriculture programme in Zimbabwe was a huge success in turning around maize production in the country and is earmarked by authorities to be in place for another three years.
“With the company’s products having done well in this (command) programme, the company expects to maintain a strong position in this market segment,” said Mr Nzwere.
He added that Seed Co would continue to register its presence in Africa while churning out more seed varieties to suit the markets. Mr Nzwere said the seed company was now present in about 15 countries across the African continent. This comes after the seed manufacturing group recorded a profit after tax increase of 41 percent to $20,7 million for the year to March 31, 2017 from $14,6 million of the prior year.
The group said turnover for the financial year to March 2017 increased by 40 percent to $135 million driven by higher sales volume of seed maize.
Zimbabwe is expected to contribute the majority of seed sales for the group in the coming selling season driven by increased support of the Command Agriculture programme. During the year under review Zimbabwe contributed 42 percent of Seed Co’s sales volumes, which operates in other African markets.
“The out-turn was particularly satisfactory given the inventory write-offs, exchange losses and increased finance charges incurred during the financial year (to March 2017). Maize sales volumes for the year increased 42 percent and this has been the reason behind our positive results. Due to anticipated increased demand in the new selling season, seed production has increased by 20 percent including some winter production to ensure that all markets are adequately serviced,” Seed Co finance director John Matorofa told the company’s analyst briefing yesterday.
The group’s gross margins improved by 1 percent last year mainly due to the product mix while operating costs increased by 22 percent driven by impairment of some receivables relating to the cotton seed business. Seed Co said finance charges for the financial year under review increased due to discounting of Treasury Bills for cash in the country and timing delays in payments by some regional Governments, which led to extended borrowings.
The group closed the year with a net cash of $18 million compared to net borrowings of $9 million the previous year, attributed to a combination of growth in profitability, increased cash sales and aggressive debt collection among others.
Seed Co said accounts receivable for the seed increased 41 percent compared to prior year as a result of delays in payments by governments in other markets on the continent. Included in the trade receivables, the group’s finance director said, were amounts due from the governments in Botswana, Zambia, Malawi, Tanzania and Rwanda, which together owe the seed producer a cumulative $16,7 million. Seed Co said it had closed the year with seed carry-over volume position of 20 percent of expected annual sales.