SEED Co said it suffered a loss of $9 billion caused by losses at Syngenta Seed Co, its South African joint venture.
he group’s outgoing chairman, Sylvester Nguni, said some “mismanagement issues have surfaced at his operation and the group is reviewing the nature of its continued presence on the market.
Syngenta Seed Co had an extremely disappointing year. The group’s share of the loss recorded by the South African joint venture was $9 billion,” Nguni said.
He said all their operations contributed positively to Seed Co’s profits except the South African joint venture. Nguni said changes have been made in the management structure of the South African business and discussions were underway on the way forward.
Seed Co does not participate in the management of Syngenta Seed Co. Unlike in South Africa, Nguni said the company subsidiary in Mozambique is continuing to benefit from the restructuring exercise carried out over the last couple of years.
Mozambique is a very difficult place to do business and caution is the watchword when any planning takes place, Nguni said.
In Zambia, Nguni said the company had a very good year with stable local sales and buoyant exports to many countries including Zimbabwe.
A strong grower base gives the business a high quality and flexible production capability that allows it to compete favourably throughout Africa.”
He said in Malawi the Seed Co brand has been well-established and market share was growing. Of concern, however, is that a large portion of the business is still in the form of government and NGO tenders. If these were to fall away for any reason, the net amount of seed sold would decline.
Nguni said early reports indicate another seed shortage in the coming season, which means that there again should be a high demand for the company’s products.
“The company hopes that normality returns to its main markets and that it is allowed to charge prices that can sustain the business and particularly its research efforts.”
Nguni said price controls in Zimbabwe meant that sustainable margins obtained elsewhere were quickly eroded.
Seed Co was awarded price increases of around 60% at a time when inflation was hovering around the 300% mark and it significantly reduced margins thereby affecting viability.
On the other hand, the cost of production increased by over 200%.
“The financial performance of the group was severely hampered by these environmental factors,” Nguni said. The group’s turnover increased by 265% while regional turnover increased by 218%. Overheads increased by 277%.