Company blames drought for tumbling performance
Less than a year after becoming a public company, listing on the Botswana Stock Exchange Limited in October 2018, Seed Co has announced a decline in both revenue and profits.
The seed company, which has its roots in Zimbabwe and today operates in 13 African countries, predominantly in East Africa, blames severe drought for its adverse results.
Two of the countries to suffer extremely dry seasons are Tanzania and Kenya, while Mozambique experienced floods that also led to the Seed Co’s poor performance.
The organisation’s CEO, Morgan Nzwere told investors and other stakeholders recently that the group suffered a seven percent decline in revenue.
This marks a drop from US$64.3 million in the previous year to US$60.1 million. Profit after tax declined by a massive 16 percent to US$3.8 million from US$4.5 million in the previous year.
Furthermore, Nzwere revealed the performance was also affected by the export market into the region, primarily due to logistical challenges experienced during the year.
However, the CEO remains optimistic about the coming year, confidently telling investors, “We are expecting much, much better results in the coming year as droughts and floods are expected to reduce.”
Nzwere said the company has adequate stock as the reduction in seed off-take in Southern Africa and East Africa increased the closing seed stocks which puts the group in a better position to supply the market in the coming season.
Increase in anticipated demand due to expected grain shortages caused by drought in East Africa and floods in Malawi and Mozambique are projected to contribute to the rebound in earnings.
In addition, the group is diversifying its streams and has announced that collaboration with global research partners HM Clause, has facilitated the sourcing of starter germplasm for commencement of breeding work on vegetables.
Whereas it’s profits went down, Seed Co. declared dividends of 0.33 USD cents per share which will be paid to shareholders by the end of this month.