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Oliver Kazunga Senior Business Reporter
ZIMBABWE’S agro-industrial group, Cottco Holdings Limited, has posted a $30,2 million loss for the year ended March 31, 2015 underpinned by a reduction in lint prices recorded by the cotton business.

Chairman Douglas Ncube indicated in the group’s unaudited results for the financial year ending March 31, 2015 that operating margins have remained low compounded by the high producer price paid as a market defence mechanism, a strategy implemented to protect market share and to set the tone for discipline in the industry for seasons to come.

“The loss for the year amounted to $30,2 million (last year a profit of $14,9 million). This includes impairments of $11,2 million in respect of trade and other receivables, inventory and inputs receivables. Included in last year’s profit is an amount of $37,2 million arising from profit on the disposal of the discounted operations,” he said.

“Revenue for the year amounted to $38,3 million (March 2014: $42 million), a decrease of nine percent. The decrease in revenue was mainly driven by a reduction in the lint prices recorded by the cotton business.”

Ncube said an average producer price of 63 cents per kilogramme was paid for seed cotton, which “significantly” exceeds the average of 38 cents per kg paid in the rest of Southern Africa.

“In addition, the low lint prices witnessed continue to put pressure on margins. Finance costs at $8 million are 40 percent lower than last year due to reduced interest rates on pre-finance contracts, and liquidation of idle assets,” he said.

Ncube said the year under review witnessed a decline in cotton production in Zimbabwe.

He said the national cotton output declined from 145,000 tonnes in 2013/14 season to 135,000 tonnes in the 2014/15 season, a decrease of seven percent.

Of late, cotton farmers in the country have complained over low producer price resulting in a number of them shifting to tobacco growing, which was more rewarding than the white gold.

“The decline was attributed to a myriad of factors, chief among them: change in farmer profile, poor rainfall distribution across the country on speculation of poor industry compliance and excessive side marketing,” he said.

Ncube said the year under review presented challenges for the group as it was characterised by macro-economic uncertainties, increased volatility in the agri-commodity sector and a continued decline in cotton production.

“During the year under review the business, continued its aggressive approach of ensuring the implementation of reforms in the cotton industry’s operations,” he said.