Dual-listed pan-African company, Seedco International has warned of a decline in earnings for the six months to September due to reduced sales volumes caused by product shortages in some of its regional Markets.
Seedco International is listed on the Victoria Falls Stock Exchange (VFEX) as well as on the Botswana Stock Exchange (BSE).
In its first half (H1) earnings update which preludes the group’s financial results, the group said its interim Earnings per Share (EPS) for the period will be approximately 380 percent to 400 percent (between 1.41 and 1.48 US cents) lower than the EPS of 0.38 US Cents for the corresponding period ended 30 September 2021.
The Equity Listings Requirements of the BSE compels issuers to announce through the BSE and the press if the variation between its expected EPS and the previous corresponding period exceeds 10 percent.
“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,” the group said.
“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 activities in the dominant Southern African markets of the Group take place in the rainy second half of the year which explains the traditional losses the Group incurs during the first half.”
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.
“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,” the group said.
For the full year financial period ended March this year, the group posted an after tax profit decline of US$ 7.1 million due to erratic rains, adverse currency movement and reduced economies of scale.
Gross margins were mainly weighed down in Zambian market due to the appreciation of the Kwacha while in other markets rising interest costs affected its performance.