Robert Tade, Livestockfeeds Plc
Despite the global economic challenges and exacerbating high cost of critical raw materials, Livestockfeeds Plc has recorded an astonishing 80 percent growth in performance.
This fact was revealed by the Chairman of the company, Robert Tade, in the 2011 annual report and accounts where he stated that the manufacturing sector especially the flour milling constituency faced enormous challenges during the year.
“Capacity utilisation further decline to about 45 percent and the sector was generally bugged down by the perennial business environmental problems which include acute state of infrastructural decay, especially energy, smuggling and unbridled dumping of cheap substandard goods,” he said.
According to him other challenges faced by the sector include high cost of funds and inadequacy of long-term loan windows to support long gestation investments.
He also mentioned threat to the political and economic stability of the country as a result of the unfortunate and continuing religious and political upheavals especially in the northern geo-political zones of the country.
According to Tade commodity prices experienced an upward shoot worldwide fuelled by the shortages/natural disasters, further compounded by the increasing demands from emerging and developing economies like Brazil, India, and also China who have been experiencing relative robust economic growth.
“The overall business environment was particularly tough for the sub-sector in 2011, largely driven by the excruciating high cost of vegetable protein materials, further aggravated by the harsh operating environment. The associated rising costs invariably led to incessant product price increases fuelling very strong customer price objections,” he said.
He remarked that margins remained thin especially for millers who lacked strategic leverage for inventory acquisition as it became extremely difficult to optimally recover cost owing to intense competitive pressures resulting to price wars.
He also disclosed that most toll millers shut down their businesses, while the very few that remained in business scaled down operation, as it became increasingly difficult to mobilise much more expanded required financial resources required to purchase and keep the same inventory of vegetable protein materials, whose prices had increased by over 100 percent compared to what it was early in the year.
However he also disclosed that the company’s cost of sales increased by About two percent when compared to 2010, and turnover increased from N2 billion in 2010 to N3.6 billion indicating a whooping 80 percent growth in performance.
“In the same vein profit before tax was N150.9 million, rising by about 185 percent over last year, while profit after tax stood at N97 million or 245 percent improvement over 2010 Our earnings per share also significantly increased, closing at 8.14 kobo per share, a clear 245 percent increase, compared to 2.36kobo in 2010,” he said.
He said that these results generally indicate improving efficiency in the overall utilisation of resources by the company’s management team in the face of very excruciating difficulties and pointed out that from the signs already being manifested early in the year propelled by the unbridled scarcity and high cost of virtually all feed raw materials that the challenges of 2012 are going to be even greater.
“I am however assured and very confident that our company would as usual overcome and turn these emergent challenges into opportunities and strength. We therefore anticipate a more robust, rewarding and excellent performance during the financial year, while also ensuring improvements in costs required to enhance our product quality and competitiveness,” he said.
He revealed that the Board bearing in mind the need to inject additional capital into the company had been on the look-out for a credible investor.
“I am happy to inform you that this objective has been met and I am therefore happy to present UACN Plc to you as the proposed new core investor in Livestockfeeds Plc with intention of taking 51 percent of the issued share capital by way of special placement,” he said.