Unresolved debt and high interest bill amounting to $13,7 million weighed down the operations of AICO Africa Limited resulting in the group posting a $5,047m loss in the half-year to September 30.
AICO chief executive officer Patrick Devenish said debt remained a key issue as short-term borrowings amounted to $162m.
He said higher borrowings had been driven by crop procurement and higher producer prices. Financial director Bernard Mudzimuirema said the group expects to reduce borrowings to less than $50m by year-end.
“Shortage of medium to long-term local funding was a challenge. The group is relying more on cheaper offshore borrowings,” said Mudzimuirema.
Devenish said Fast Moving Consumer Goods (FMCG) business was 19% lower for the half-year ended September 30 2011, compared to last year while revenue was 36% higher.
Davinish said FMCG continued to face challenges due to stiff competition from imports and soya bean shortage for Olivine industries to produce most of its brands including cooking oil.
“Power and water shortages continue to lead higher operating cost,” said Davinish.
The group recorded sales of 19% above last year.
Revenues were up 117% to $115,021m. Loss before tax amounted to $4,1m from $11,7m last year after charging an impairment provision of $3 million against the group investment in Scottco Limited.
Loss after tax of $5 million was an improvement over the previous period of $10,9m due to the $4,6 million net profit recorded in cotton, together with improved first half performance in both the seed and FMCG business.
Net cash utilised in operations amounted to $76,4 million, largely driven by concurrent crop procurement activities across the group. Capital expenditure amounted to $13,4 million.
“Aggregate sale volumes for the year will be marginally higher than last year due to volume losses already recorded in the cotton and FMCG business. Profits and attributable earnings are, however, forecast to be higher than last year,” said Davinish.