Sifelani Tsiko Agric, Environment & Innovations Editor
Seed Co Limited’s revenue for the half year to September 30, 2022 grew modestly by 5 percent to ZWL$8.4 billion from ZWL$8.1 billion last year in inflation adjusted terms.
Group chief executive officer Morgan Nzwere said the company posted a ZWL$2.6 billion profit compared to a loss of ZWL$7.4 billion through a raft of value preservation strategies.
“Revenue trebled in historical terms and grew 5 percent in inflation-adjusted terms despite volume dropping by 20 percent as prices moved in line with official exchange rate depreciation,” he said.
“Value in the business was preserved through revenue contracts which were pegged in USD but settled in ZWL at prevailing foreign exchange rates and USD royalties – hence the sizeable other income amount.”
Finance costs were a major drain for the seed manufacturing concern following the policy rate hike from 40 percent to 60 percent by the Reserve Bank of Zimbabwe announced on 28 October 2021.
Despite the jump in overheads, finance costs, lower volume and monetary loss the company’s value and profitability was hedged through the foreign exchange gains.
Maize seed sales volumes at 22 600 tonnes rose 60 percent compared to the same period in the prior year.
Nzwere said Zimbabwe’s first half sales volume were lower due to the liquidity crunch in the economy and the delayed launch of government programmes.
Sales volumes have since improved significantly with the onset of the 2022 -2023 summer rains and the rolling out of government agricultural programmes with the bulk of sales being done in USD.
Going forward, Nzwere said the company will aim to reduce finance costs, harness more local USD sales and leverage export revenue generation in other regional operations.
“Despite the harsh and uncertain operating environment, we will focus on defending our leading market position, stakeholder value enhancement by harnessing hard currency local sales as well as exploiting regional export opportunities,” he said.
“Sales volumes and USD local and export sales are now significantly higher than the same period in the prior year owing to the onset of rains which are forecast to be above-normal for most parts of the country and the increased uptake under government-related programmes.”