AGRICULTURAL inputs conglomerate Seed Co’s turn-over for the year to February 2006 surged 504% to $2 trillion, reflecting strong demand for se
ed during the period under review.
Gross profit increased 417% to $829 billion after cost of sales wiped $1,2 trillion from revenue.
Gross profit margins, at 41,5%, were 7% lower than the 48,5% recorded the previous year.
Operating income, at $427%, was 3 100% up on the previous year, spurred by exchange gains from a review of the exchange rate during the period under review. The devaluation of the Zimbabwe dollar and the strengthening of the Zambian kwacha contributed the bulk of the exchange gain.
Overheads shot up significantly during the year, reflecting the effects of a hyperinflationary economy.
Seed Co’s board said in a commentary accompanying the company’s results that $80 billion of the overheads had been part of retrenchment costs incurred during the downsizing of Zimbabwe, Botswana and Mozambique operations.
Net finance costs increased by 928% to $105,8 billion during the period, and there was an attributable income reaching $389 billion, pushing basic earnings per share 631% to $3 115,57.
The company, as reported by businessdigest over a month ago, divested from South Africa’s Syngenta Seed Co which is currently subject to voluntary liquidation following a run of losses.
The company’s board said there had been strong demand during the year, with significant quantities having been “ordered by the governments of Malawi, Zambia and Zimbabwe to mitigate the food shortage in the region”.
However, despite the strong demand, there were problems experienced in the form of late start of the rainy season and shortages of critical inputs like fertiliser, chemicals, and diesel for land preparation.
“This affected production and consequently the volumes available for sale in the domestic markets. As a result, seed had to again be moved across borders from areas with surpluses to those with deficits,” the company said.
Financing arrangements had delayed the movement of seed, limiting the amount of seed that could be shipped in time for the planting season.
During the year, Seed Co acquired Quton, the seed division of the Cotton Company of Zimbabwe (Cottco), for $475 billion which was settled through the issue of 29 656 750 ordinary shares to Cottco shareholders.
This made Seed Co a subsidiary of Cottco.