THE Seed Co group produced an excellent set of results for its half year as evidenced by the 2 464% increase in profit after tax from $142,9 million in the prior comparable period to $3,665 bill
ion for their first half, significantly ahead of inflation for the period.
This coincided with an increase in operating margins from 36% in the prior period to 48% for this period.
The rise in profit was largely driven by a huge increase in other operating income up 1 772% from $346,5 million in the previous comparable period to $6,485 billion derived mostly from net exchange gains of $5,9b. The sustainability of these earnings has to be questioned.
Cost of sales as a percentage of turnover, 48% for the current set of results represents an improvement on the prior comparable period where the figure was at 64%; an indication that the group is watching its costs.
However, a major concern was the sharp rise in overheads, which grew by 411% from $862,8 million in the prior comparable period to $4.413 billion.
With local overheads rising 315% ahead of the rate of inflation, while regional overheads were up 480% this management attributed to the devaluation of the local currency and increased production in these markets.
The percentage of turnover derived from the region declined as compared to the prior period from 74% to 69%. Local turnover was affected by 33% decline in local winter cereal sales, while the region experienced a 6% decline in real volumes due to last season’s stockout.