THE Cotton Company of Zimbabwe (Cottco) has had to fork out over $206 billion from its coffers in interest charges on loans it had accessed from various financial institutions for its operati
The interest bill, which is the second largest cost element for the company, is said to have negatively impacted on the cotton producer’s net earnings for the period under review.
Despite the company declaring an operating profit of over $237 billion – a growth of 59% – it invested billions in its crop purchase scheme.
Cottco chairman Nick Nyandoro said delays in the disbursement of its offshore lines of credit and persistently high interest rates during the course of the year had significantly impacted on the company earnings.
“Interest payable of $206 billion was a consequence of the high rates of interest prevailing throughout the year under review and the aforementioned delays in the disbursement of offshore lines of credit,” Nyandoro said.
The interest rate ranged on average around 118% during the course of the year, but was recently reviewed by the central bank to over 180%.
Cottco’s net tax bill stood at $2 billion during the period under review, being a result of non-taxable export incentives as well as reduced profitability.
Attributable earnings to shareholders tumbled 104% from the previous year’s figure of $102 billion.
“Earnings attributable to shareholders declined by 104% from last year’s $102 billion,” said Nyandoro.
Group’s turnover increased by 317% to break the trillion dollar mark to $1,2 trillion for the year ending March with interest in SeedCo contributing $473 billion to the group’s earnings.
Nyandoro however raised concern over the continued increase of players in the sector which he said compromised the quality of the crop as many of the new entrants were not investing in inputs for the farmers.