SEED CO Ltd is this year set to reduce production by nearly two-thirds due to carry over stock from last year, according to CEO Morgan Nzwere.
Nzwere told shareholders at an annual general meeting this week the company would cut seed production to 24 000 tonnes compared to last year’s 64 000 tonnes, a move aimed at clearing carry-over stock. “Closing stocks by year-end will be reduced by 47% as compared to prior year,” he said.
This, however, comes after the company early this year anticipated to produce 68 200 metric tonnes of seed for 2012/13 in correspondence to the market size.
Apart from carryover stocks, the company had been set back by debtors, particularly government, which had however committed to pay the US$13 million it owed the company by end of this August. Payment by other debtors, who owe the company US$16 million, was slow due to the persistent liquidity challenges, Nzwere said.
Seed Co was striving to reduce borrowings in the current financial year to US$40 million, compared to US$44 million in the year ended March 31 this year. Borrowings in the year March 31 2012 had doubled to US$44 million to fund carryover inventory. This resulted in net finance costs going up 70% to US$4,33 million from US$2,92 million the previous year.
The Seedco group recorded a 20% rise in turnover to US$117 million in the year under review, helped by a 22% increase in sales volumes to 67 240 metric tonnes.
In terms of contribution by market, Zimbabwe brought in 38% to turnover, Zambia 23%, Malawi 10%, East Africa 9%, Botswana 7%. Cotton seed producer Quton contributed 13% to group turnover.
Zimbabwe sales volume grew 74% as the group fought to increase market coverage, taking into account the abundant viability of stocks. Nzwere said the company’s market share in Zimbabwe remained flat at 70%, Zambia 51%, Malawi 50%, Tanzania 46% and Kenya 10%.
The group reported a net profit of US$19,08 million, an increase of 10% in the comparable period, while earnings per share also grew 10% to 9,90 US cents.
Nzwere said a new seed processing plant was currently being installed in Kenya while an acid delinting plant was also being installed in Malawi and Tanzania.