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AICO performs below expectation

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AICO Africa Limited operations performed below expectations in the full year to March 31, 2013 due to a 34% decline in seed business profits and losses.

AICO Africa Limited operations performed below expectations in the full year to March 31, 2013 due to a 34% decline in seed business profits and losses in both the cotton and fast-moving consumer goods (FMCG) businesses.

Business Reporter

In a statement accompanying the group’s results, company chairman Bekithemba Nkomo, however, said the FMCG business improved.

“The seed business suffered a 12% fall in volumes to 59 406 tonnes mostly as a result of sales volumes shortfalls in Seed Co Zimbabwe.

Slow payment of trade receivables by key customers together with high inventory levels resulted in interest charges escalating by 73% to $7,4 million,” Nkomo said.

During the period under review, revenue for the group was 10% lower than last year at $263,9 million due to much softer lint prices compared to last year. The lint prices were 45% lower than the prior year.

Operating costs were 29%   higher than last year at $73,4 million while operating profit was 37% lower than last year at $24,2 million.

“Consequently, loss before tax of $0,5 million fell 103% relative to last year after charging interest costs of $25,4 million (Last year $24,4m). Higher interest charges are due to higher loan facilities necessitated by the need to increase working capital financing to cope with late payment of trade receivables in the seed business,” he said.

Profit after tax went down 114% to a loss of $2,1 million during the period under review.

Group sales volume rose 18% above last year to reach 213 720 tonnes driven by improvement in cotton intake volumes.

Earnings Before Interest Depreciation and Amortisation (EBIDTA) was 31% lower at $32,7 million.Capital expenditure for the group was $10,9 million during the period under review.

Going forward, Aico expected a resurgent performance from the seed business driven by recovery of sales volumes in Zimbabwe and in the east African businesses and new business in West Africa.

Nkomo said the fundraising initiatives were taking long and the group was engaged in a number of discussions that were now at an advanced stage.