Lagos, 31 December 2019 – Notore Chemical Industries Nigeria Plc (“Notore” or the “Group”), a leading vertically integrated agro-allied and chemicals business, today announced its audited results for its Financial Year Ended (“FYE”) 30th September 2019.
Group Financial Highlights
Notore recorded revenue of ₦21.4 billion for its 30 September 2019 FYE, compared to ₦26.8 billion for the corresponding 2018 period resulting in a 20.1% decline Y-o-Y. This was mainly due to plant downtime which persisted during the period under review. Notore has commenced its Turn- Around Maintenance (“TAM”) program. The $37million Facility granted by Afrexim has been drawn down and orders placed for critical components. The TAM program is expected to be completed by FYE 2020. The completion of the TAM program will ensure the Plant operates at its nameplate capacity resulting in a consistent and significant improvement in production numbers and revenue. To the extent that Notore’s operating costs (₦ 24.5 billion in FY 2019 and ₦ 24.0 billion in FY 2018) are largely fixed, it is expected that a significant amount of the upside from the increase in revenue post TAM will flow to the bottom line.
Notore’s Operating Profit in the FY declined by 62.9% from ₦9.2 billion in FYE 2018 to ₦3.4 billion in FYE 2019. The Group recorded a loss for the year of ₦5.7 billion (FYE 2018: ₦1.9 billion) mainly because of its Net Finance Cost which rose from ₦ 12.8 billion in FY 2018 to ₦ 13.7 billion in FY 2019 (7.2% Y-o-Y increase).
Market & Operational Developments
Nigerian fertilizer demand is quite robust and is expected to continue to grow because of the Federal Government’s efforts to increase both the supply and demand for fertilizers, through the provision of subsidies, grants and loans; and through recent Government initiatives such as the Presidential Fertilizer Initiative (PFI). The domestic fertilizer market is yet to reach its full potential as the consumption of fertilizer per hectare of arable land in Nigeria is below 10kg compared to the 200kg recommended by the Food & Agriculture Organization. Furthermore, the demand for urea and compound fertilizers, such as NPK, from the West African markets and Sahel African states is also quite significant. Notore sold all the urea that is produced (208,483MT) during the period under review.
Outlook for the Year
The current Federal Government policies in the fertilizer space are quite favourable to Notore’s business. Additionally, on-going market demand for NPK and NPK speciality will boost the business’ revenues when Notore’s newly installed and commissioned 2,000 MTD NPK blending plant begins its inaugural production in FY 2020. Consequently, Notore has begun gradual efforts to further diversify its revenue streams by selling specifically produced Notore seeds to farmers. Notore’s greatest challenge to its PAT remains its Net Finance Cost; and asides the TAM initiative which will be completed in FY 2020 to introduce reliability into Notore’s Plant, the Group is working on various other initiatives for FY 2020 to bring the company to profitability by considerably reducing its Finance Cost and improve its working capital.