FrieslandCampina WAMCO Nigeria PLC, makers of high-quality milk brands, Peak and Three Crowns, reported its full-year 2018 results on Tuesday, with revenue growing 6% to N149.2bn compared to N140.1bn it recorded in 2017.
The nation’s largest dairy producer said it faced macroeconomic, infrastructural and security challenges during the year under review despite a slight improvement in the economy from the previous year. It highlighted improvements to include economic growth of 1.93% from 0.82% in 2017, according to the National Bureau of Statistics. Foreign exchange rates also remained stable except for the fourth quarter when the Central Bank of Nigeria (CBN) reduced intervention, forcing manufacturers to source for FX from Investor & Exporter Window, which drove up input costs for manufacturers.
However, it faced infrastructural deficits such as low power supply, bad roads and poor congestion which resulted in the high cost of production. Insecurity across the country also hampered business activities, particularly in the Northeast with the Boko Haram insurgency and in the middle Belt crisis with farmers and herders.
The dairy giant said that consumer spending remained subdued due in part to a 23% unemployment rate in Q3 2018 with workers being owed wages in arrears for several months in many states and local governments. As a result, many consumers continued to down trade to cheaper options such as the low unit portion packs.
The company noted that higher milk prices, cost of barging, demurrage and transportation due to port congestion drove up Cost of Sales by 5.8% to N118bn, from N110bn in the previous year.
While Pre-tax Profit increased by 3% to N16.3bn from N15.9bn reported in the previous year, Profit After Tax declined by 2.19% to N11.8bn from N12bn recorded in 2017.
The Shareholders approved a total dividend payout of N9.27 per N0.50, having paid an interim dividend of N2.91 per N0.50 share in October 2018; and a final dividend payout of N6.36 per N0.50 share.
The firm noted that it recorded major milestones in its Dairy Development Programme, which included the construction of additional milk collection points to support milk collection; investment in milk trucks and farm machinery; and the establishment of four dairy cooperatives.
In his statement to the media on the company’s Q1 performance and outlook for 2019, the Managing Director, Mr Ben Langat, said: “FrieslandCampina WAMCO delivered a strong result in Q1 2019 with 10% topline sales growth vs Q1 2018. As a company, we remain positive and confident about the future. We are assured that our brands which are leading in the market will continue to grow. We will sustain the current initiatives that have proven to be effective and develop innovation that consolidates our market leadership to meet the everyday needs of our customers and consumers.”