AGRO Industrial Group Aico Africa Ltd has recorded a 53% drop in revenue for the half year to September 30,2012 as it suffered low first-half volumes at its seed subsidiary, Seedco Ltd.
Report by Clive Mphambela
A slow start to cotton buying season and falling global lint prices dented other subsidiary Cottco’s performance.
Group sales revenues dropped from US$115 million to US$53,8 million following low first-half sales from Seedco and Cottco.
Aico suffered an operating loss of US$18,1 million, after impairment losses of US$8,6 million from its inputs credit scheme eroded revenues.
The group’s recorded loss widened to US$27,78 million from US$4,352 million last year.
Aico CEO Patrick Devenish said the group had now been streamlined into three operating companies, Seedco, Cottco and Olivine Industries.
“Exhort is still for sale. There are many interested parties but we need to see their money first,” he said. Devenish said the company was facing difficult operating conditions, with low first-half revenues in Seed Co and Cottco.
The low inputs scheme recoveries were a major concern to the group.
He said while the situation at Olivine was better, with the company posting smaller losses, the firm was still short of funding after money used to recapitalise was eaten up by loan facilities and finance costs.
Aico’s Group finance director Bernard Maunganidze said the financier bank had done this to lower their risk.
Devenish said the strategy at Olivine to streamline product range was working and they had significantly shortened the working capital cycle and created efficiencies.
“ The introduction of the 25% surtax on imported products is good for Olivine as even Sadc countries have to pay it,” he said.
Devenish said Olivine would be significantly boosted by additional working capital and new equipment. Olivine’s sales volumes at 6,157 tonnes, were 2,5% up on last year while revenues at US$11,5 million exceeded last year’s sales by 17%.
Devenish said while Cottco had an excellent year in terms of cotton seed intake, which was 45% higher than last year, the anticipated earnings increase was offset by the increase in the lint purchase price to 35US cents from 30US cents per kg which had increased the cost to US$7,5 million.