Chellarams suffers ₦2.8bn loss amid mounting competition, rising cost

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Chellarams Plc posted a net loss of ₦2.8bn for the full year ending on 31st March 2019, as the dairy, industrial chemicals and machinery player continue to battle intense competition from other big players.

Chellarams, makers of Oldenburger, Regal and Real milk brands in its results revealed that soaring cost of sales hurt margins leading to a net loss.

Despite a 28percent rise in sales to ₦11.2bn, cost of sales ballooned by 55percent to ₦10.7bn from ₦6.9bn in the previous year leading to a Gross Profit decline of 71percent to ₦527m.

However, the dairy maker reported strong sales growth in its FMCG business line which includes its joint-venture dairy business, Chellarams-DMK Limited. The segment was the strongest in all of its business lines with 123percent sales growth to ₦2.95bn.
The industrial Chemicals business line also performed strongly with 70% sales growth to ₦4.1bn.

However, the growth was not enough to offset a significant rise in costs as the company declared a pre-tax loss of ₦985m in its FMCG segment due to higher cost of sales of ₦3.1bn on revenue of ₦2.9bn.

Chellarams did not report any activity in its bulk milk ingredients and Cycles segments respectively.

The company noted in its financial statement that it has discontinued its US dollar denominated term loans and entered a new term loan agreements denominated in Nigerian Naira.

The company had earlier this year launched a new food drink “Real Active Malted Food drink”

 

OLUFIKAYO OWOEYE

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