The Sunday Mail
Enacy Mapakame
Regional seed processor Seed Co International Limited, is upbeat in maintaining its growth trajectory on continued support for agriculture production across the region that should drive demand.
Already, governments across the region are working towards enhancing food security and reducing the negative impacts of the Covid-19 pandemic.
During the year to March 31, 2021, the group recorded earnings and volumes growth with management hopeful of maintaining this in the current financial year and going forward.
Group chief executive officer Morgan Nzwere, indicated Malawi, Kenya, Zambia and Tanzania are anticipated to grow market share as well as their earnings performance while export markets should consolidate contribution to group’s performance.
“Subject to favourable climatic conditions, the group is expected to ride on the phenomenal performance achieved in the just-ended financial year,” said Mr Nzwere.
In FY21, profit jumped 81 percent to US$11,1 million from US$6,1 million on growing seed demand as the region continues to push for food security. An operating profit of US$18,1 million was achieved which was 30 percent above the US$13,9 recorded in the previous year.
At US2,85 cents, basic earnings per share came in 74 percent above the comparable year. According to the group, profit performance improved significantly on robust revenue growth and interest cost savings.
The group’s selling season witnessed above average rainfall across most countries, which drove seed demand coupled with firm maize commodity prices and stakeholders’ support towards food security in the wake of the Covid-19 pandemic. Resultantly, maize seed volumes jumped 24 percent to 38 300 tonnes from 30 700 tonnes in financial year 2020.
Maize seed continued to dominate both revenue and volume contribution driven by government support programmes in Malawi, import substitution initiatives in Nigeria, business development in Mozambique and DRC as well as good rainfall in Tanzania and Kenya.
Wheat seed sales dropped compared to last year on account of advance sales at the end of last financial year as farmers stocked up in fear of Covid-19 induced lockdown.
Generally, the year under review was marked by Covid-19 pandemic which had adverse effects on business operations across the region and globally. However, the group was spared the worst effects of the pandemic due to its essential business status as an agricultural entity in its multiple jurisdictions.
Total revenue rose 26 percent to US$88,5 million on improved seed demand across the region. Malawi doubled sales to US$19,4 million as it benefited from its Government input programme.
In Kenya, sales went up 46 percent to US$12,4 million boosted by both local and export demand.
Turnover in Zambia was 7 percent ahead of comparable year to US$28,7 million while Tanzania rose 7 percent to US$17,7 million on attractive grain prices, which improved seed uptake and planned area.
Nigeria doubled sales to US$2,1 million on growing confidence in the brand.
The Southern African Customs Union region which now comprise of Botswana and Mozambique witnessed a 17 percent jump in revenue to US$9,4 million.
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Gross margins remained unchanged while other income declined significantly as the exchange gains recorded in the prior year did not recur. Overheads rose on the back of distribution costs linked to growing sales. Total assets came in at US$137,2 million from US$127,7 million in the comparable year.
Non-current assets increased due to capex focused on future rental cost savings and enhanced seed production efficiencies as well as capitalisation of associates. Receivables grew to US$58,3 million from US$52 million on account of increased sales though at a slower rate due to impressive collections. According to the group, included in the receivables is US$17,1 million due from related parties of which US$7,5 million was settled post year end.
While there are uncertainties due to Covid 19, food security is expected to remain high on the agenda across the region which should continue to push demand for seed.
The group’s initiatives in research and development as efforts to afford the market early maturing seed varieties that are also disease resilient should also pay dividends.
Meanwhile, the group secured license in Ethiopia but business establishment efforts are being hampered by the Covid 19 pandemic.
Mr Nzwere however highlighted expansion drive into Ghana and Francophone West Africa are continuing with an agro- distributor with outlets in Central and West Africa signed up.
“However product demand crayon activists are slow due to Covid 19,” said Mr Nzwere.
The group declared a dividend of US0,97 cents a share.
