Local seed producer, Seedco Limited’s earnings for the Half-Year ended September 30, grew 55 percent in inflation adjusted terms against comparable period last year, to record ZWL$ 975 million thanks to strong sales volume growth and selling price increases in response to the inflation induced rise in operating costs.
Maize seed sales grew in excess of 100 percent compared to comparable period prior year while wheat sale were 10 percent up.
“Increased focus on local wheat production to reduce import dependence and improved irrigation capacity due to better electricity supply drove the increase in wheat seed sales volumes,” the company said in its latest trading update today.
In addition, there was increased uptake of maize seed on the back of a Lowveld winter grain production initiative targeted to enhance food security in the Masvingo province in the wake of recent devastating droughts in that area.
“The Group’s half year results were enhanced by a combination of the positive contribution from the foreign associate on account of early maize seed demand across the region and an encouraging out-turn from the local cotton seed associate and the vegetable seed joint venture,” said Seedco.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) reached ZWL$ 588 million.
However the company endured high cost of borrowing during the period at 45 percent leading to delays in the completion of its artificial seed dryer project.
“Capital expenditure (CAPEX) was mainly directed towards the artificial seed dryer project whose completion was unfortunately delayed by a combination of foreign currency shortages, liquidity challenges and Covid-19 restrictions,” the company said.
Inventory levels increased due to seed deliveries from contracted seed growers for processing in preparation of the main selling season in the second half.
Meanwhile, foreign denominated payables were successfully registered under the central bank legacy debt framework though settlement modalities are yet to be determined, the company said.
The company is set to merge with its holding company, Seed Co International (SCIL) following its delisting from Zimbabwe Stock Exchange and ultimate listing on the Victoria Falls Stock Exchange.