Malawi weighs on Seed Co Int profit


The Herald

Enacy Mapakame Business Reporter

Botswana Stock Exchange (BSE) listed regional seed maker Seed Co International Limited anticipates depressed earnings for the half-year to September 30, 2022 after being negatively impacted by reduced seed sales volume.

Company secretary Eric Kalaote said the group was largely weighed down by the Malawi market, which did not experience early seed sales coupled with product shortages in Nigeria and Kenya.

For the seed producer, the first half of the year is a cost accumulation period, with seed sales peaking in the second half, which marks the onset of the rainy season across the Southern Africa region.

According to listing regulations on the BSE, issuers are compelled to announce through the BSE and the press if the variation between its expected Earnings Per Share (EPS), and the previous corresponding period exceeds 10 percent.

In line with this, the seed producer issued a profit warning for its various stakeholders and investors.

“The board hereby announces that the group’s interim EPS (earnings per share) for the full half-year ended 30 September 2022 will be approximately 380 percent to 400 percent (between US1,41 cents and US1,48 cents) lower than the EPS of US0,38 cents for the corresponding period ended 30 September 2021,” said Mr Kalaote in a trading update.

“The notable significant anticipated adverse outturn is mainly due to reduced sales volume in the absence of the unusual early seed sales that occurred in Malawi, product shortages in Nigeria and Kenya unlike prior year.

“With the non-recurring early seed uptake in Malawi, the group reverted to the traditional first-half cost accumulation status in line with the highly seasonal nature of the business.

“Meaningful sales activity in the dominant Southern African markets of the group takes place in the rainy second half of the year which explains the traditional losses the group incurs during the first half. Investors are therefore advised to exercise caution when dealing with the securities of Seed Co International Limited,” he said.

The group is, however, upbeat about good full-year performance as rainfall forecasts are indicating normal to above normal rains in most parts of Southern Africa and below normal to normal rains in parts of East Africa. This is expected to drive demand for seed.

This is also supported by the region’s focus on food security which should see increased agricultural activity, as the region seeks to offset the adverse impact of the Covid-19 pandemic on food production. Mr Kalaote said: “On the back of enhanced focus on food security and the strength of the geographical spread that will mitigate mixed rainfall forecasts, the group is optimistic of better performance.”

Seed Co International Limited is also listed on the Victoria Falls Stock Exchange (VFEX).

 



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