Zimbabwes Seed Co sees profit up 50 pct this year

Seed Co Limited, Zimbabwes largest seed producer, sees profit rising at least 50 percent this fiscal year from $13 million in the year to March 2010, buoyed by growing sales at home and in the region, its chief said.

Companies in Zimbabwe have started to recover after a decade of economic decline, which saw inflation rising to 500 billion percent in 2008, leaving the local currency worthless.

Zimbabwe discarded its local currency in favour of foreign currencies last year, which Seed Co Chief Executive Morgan Nzwere said had helped stem a decline in production at home, while demand was rising in southern Africa.

Seed Co has been expanding on the continent and controls more than half the maize seed market in Malawi and Zambia, 40 percent of the Tanzanian market. It is also testing new maize varieties for sale in Ethiopia and West Africa.

"We should see an overall growth of 70 percent in seed production (and) the profit should increase substantially," Nzwere told Reuters in an interview on Monday. "I think we should be able to achieve at least a 50 percent growth in profits."

The company posted an net profit of $13.3 million during the year ended March 2010 after revenues rose 43 percent to $77 million.

Nzwere said the company, which also produces wheat and cotton seed, was planning to raise maize seed production to 100,000 tonnes annually in the next three years, nearly double the projected output in 2010/2011.

Seed Co reinstated dividends this year, paying shareholders 1,39 U.S. cents a share and Nzwere said the company should be able to maintain its dividend policy in future.

Nzwere said the company would also be boosted by demand from governments providing free and subsidised seeds to poor farmers in Zambia, Malawi, Tanzania and Zimbabwe.

"The increased donor support to governments in the region to improve food security will continue to push up demand for seed for the foreseeable future and that should see the company benefitting from that," he said.

The Seed Co shares closed on Monday at $0.93 on the Zimbabwe Stock Exchange, unchanged from last week.