AICO Africa Ltd sees its seed business resurging in the current financial year to March 2014 helped by a recovery in sales volumes in Zimbabwe and growth in the East African business as well as the establishment of a West African business.
In a statement attached to the group’s financial results for the full year to March this year, Aico said the performance of its Fast Moving Consumer Goods and cotton business would depend on timely availability of funding.
The group announced it was in negotiations with a view of restructuring the business.
Cottco expects 100 000 tonnes of cotton to be delivered, 50 000 tonnes less from the 150 000 delivered last year.
However, the company warned its cotton business’ performance depended on striking a balance between intake volumes, inputs schemes, seed cotton buying prices and global lint prices.
Aico CEO Patrick Devenish last week said 20 000 tonnes of cotton had so far been delivered, adding the company was pinning hopes on loyal farmers to bring the remainder in the forthcoming period.
He said although some places had abandoned cotton production and opting for tobacco farming, the company was leveraging on farmers in Sanyati and Gokwe who remain steadfast in cotton production.
“The big intake has started now, yesterday (last Thursday),we had a big intake. We have received 20% now,” said Devenish.
In the full year to 31 March 2013, Aico reported an after tax loss loss of US$2 million. Interest expenses remained high at US$25 million in the period under review from US$24 million last year.
The group had US$11 million in borrowings as at March.
Aico injected additional US$6,5 million capital in Olivine Holdings Ltd, shoring up its shareholding to 49,31% stake in the company.
This also brings the group’s investment in Olivine to US$12,5 million.Cotton revenue went down 20% in the period, the company said.
The cotton business was impaired by a significant fall of international lint prices from above 240 US cents last year to around 80 US cents per pound.
The price impasse experienced resulted in a delayed and compressed buying season resulting in side marketing.
“This scenario adversely affected our inputs recoveries ,the high inputs under recovery resulted in huge debtors impairment,” said Devenish.
As a result, revenue fell 20% over prior year despite the increase in sales volumes.
“Improvements in inputs scheme recoveries and on farm yields remain a focus area as does the elimination of core debt which is costing this business approximately US$6 million in finance costs a year,” he said