Seed Co International Report: Net Debt-to-Equity Ratio Up 34% as Restructuring Responds to Rising Costs & Weakening Currencies
- What strategies is The Seed Co International Limited implementing to respond to rising costs and weakening currencies?
- The Group is restructuring its business model and balance sheet to respond to the rising cost of doing business and to hedge against weakening currencies.
Overview
- Financial year of mixed fortunes with record business growth in some markets, but reduced business in others
- External factors (mainly exchange losses) more than reversed business growth gains, leading to reduced profitability
Financial Performance
- Revenue increased due to good volume performance in East Africa and Zambia
- Gross margin faced pressure from imported global inflation that could not be passed on in pricing to small-scale farmers
- Other income reversed significantly due to exchange losses
- Overheads increased in line with business growth in East Africa and in response to global inflation developments
- Cash generation remained positive but at lower level compared to prior year, while borrowings and finance costs increased due to CAPEX and working capital growth
- Associate and joint venture’s negative contribution increased due to exchange losses
- Net profit declined mainly due to exchange losses
Financial Position
- Non-current assets decreased due to depreciating regional currencies
- Carrying value of investments in associate and joint ventures reduced due to FX induced losses
- Receivables increased due to business growth, with $5.5m due from related-parties (reduction from previous year)
- Net debt-to-equity ratio increased due to lower profitability and the impact of exchange losses on equity
Outlook
- Turnover and volume growth implies strength of Group’s market standing and brand equity amidst global and regional challenges
- Global supply shocks and imported inflation remain elevated, compounding the effects of climate change in Africa
- Group is restructuring business model and balance sheet to respond to rising cost of doing business and hedge against weakening currencies
Useful links
- Seed Co International Limited (SCIL.bw) 2023 Abridged Report
- Seed Co International Limited on AfricanFinancials
About Seed Co International Limited (SCIL.bw)
Seed Co International Limited is one of the leading certified seed companies authorized to market seed varieties developed by itself, government and other associated seed breeders in its markets. From years of intensive investment in R&D, the Company is involved in the breeding, multiplication and distribution of mainly hybrid seed varieties. Seed Co International Limited is primarily listed on the Botswana Stock Exchange, with a secondary listing on the Zimbabwe Stock Exchange
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