Mr. Taiwo Adeniyi

Eromosele Abiodun

Group Managing Director, Vitafoam Nigeria Plc, Mr. Taiwo Adeniyi, has blamed tough operating environment for the decline in the company’s profit recorded in the financial year ended December 31, 2015.

Adeniyi, who assured the shareholders of higher value, expressed concern about the effects of forex scarcity and imported raw materials on the production of foams in Nigeria.

Vitafoam’s profit before tax fell by 24 per cent to N534 million, from N709 million, while profit after tax recorded a higher decline of 42 per cent to be at N249 million, down from N435 million in 2014.

It recorded a growth of 8.8 per cent in revenue, rising from N16.713 billion to N17.185 billion, while gross profit rose marginally by 0.7 per cent to N5.433 billion, from N5.395 billion in 2014.

He, however, expressed optimism that Vitafoam would continue to operate optimally as measures have been put in place to strengthen the company’s operations with cost saving approach.

Addressing shareholders at the company’s Annual General Meeting (AGM) in Lagos, he said the company has commenced a new initiative to reduce operating costs and boost shareholder value.

Besides, he said the company has almost concluded arrangements to commence production of oil filters and allied motor spare parts through its newly established subsidiary.

Chairman of the company, Dr. Dele Makanjuola explained that the on-going inclement operating environment had forced the company’s Board and Management to embark on cost saving initiative in order to sustain the company’s competitive edge.

Makanjuola, who reviewed the current challenges facing manufacturing firms in Nigeria, noted that Vitafoam was able to remain profitable due to the prudent approach towards management of human and material resources.

“The foam business is operating in a very competitive environment. There are over 300 manufacturers. It is stressful to operate in the foam industry. As professionals, we have tried to keep administrative and financial cost under control. This prudent approach enabled us to generate profits and declared dividend of 25 kobo per share in an environment where many companies are closing business. We were able to achieve this feat despite the high cost of operation because of our careful management practice.

“As we try to control our cost, we have decided to limit our exposure to our subsidiaries to a maximum of 40 per cent. This is expected to relieve us of financial burden of 100 per cent ownership. We can always raise 60 per cent equity through private placement.

“We have almost concluded plan to commence production of oil filter in our new subsidiary. As for Vono Products, we shall keep the brand. We have gone to the Corporate Affairs Commission (CAC) to ensure that the brand is not taken away,” Makanjuola said.

“Despite this uncertain disturbing outlook, our company will remain resolute in the implementation of nascent strategies that will enable the harvesting of low-hanging opportunities in the economy to improve growth prospects across several markets. Innovation and new products development will be the key drivers of our corporate strategy. We shall stay committed to the company’s brand reposition of much more than mattress by broadening the scope of our products offerings across the Vitafoam Group,” he said.