Flour Mills of Nigeria Plc said it has increased its reliance on local raw materials as part of efforts to overcome the challenges posed by the shortage of dollar supply in the country.
The country’s biggest miller by market value also said manufacturers in the country are finding profits under pressure as a result of macroeconomic headwinds.
Generally, he said the year had seen a confluence of adverse conditions, including dwindling oil prices, capital flights, forex scarcity, higher interest rates, power failures, congestion issues, gas and fuel shortages, security threats, among others.
“Taken together, these factors have contributed to a perfect storm that blindsided many other Nigerian businesses, especially those who had not taken the necessary precaution. Whereas much of the sector was brought to its knees this past year, Flour Mills Nigeria has been able to navigate through these troubled times increasing market share and streamlining its cost structure,” he added.
Coumantaros said the manufacturing industry was grappling with monumental challenges including a deteriorating road network, inadequate power supply, worsening security concerns and unrest in the North-eastern part of the country.
“The challenge ahead will be to continue mitigating the effects of our operations of external factors beyond our control and to take matters into our own hands as much as possible. We have just started reaping the benefits of our agro-allied strategy which has afforded us a degree of freedom not available to our competition, who do not have the benefits of a local engine of growth,” he said.
Flour Mills’ results for the year ended 31st March 2016 showed that the group recorded 49 per cent in its profit before tax from N7.7billion to N11.5billion. Also, the group profit after tax climbed to N14.4billion, representing an increase by 71.4 per cent, compared with the N8.4 billion realised in 2015. Furthermore, the group revenue grew by 11 per cent from its 2015 figures of N308billion to N342billion in the year under review.
However, the company posted revenue of N248billion, which represented a growth of eight per cent over the N230billion realised last year.
The Group Managing Director of Flour Mills, Mr. Paul Gbededo, noted that in spite of the strong economic headwinds and tough business environment, devaluation of the naira and unrest in the North-eastern region of the country, the Flour Mills Group had an inspiring year.
Oil and Gas Dealers Threaten Withdrawal as 70% of Downstream Businesses Collapse
The downstream oil sector in Nigeria faces a looming crisis as oil and gas dealers, represented by the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), issue a stern warning of potential service withdrawal.
In a recent resolution following their executive committee meeting in Abuja, NOGASA expressed grave concerns over the collapse of approximately 70% of businesses in the industry due to the harsh operating environment.
President of NOGASA, Benneth Korie, highlighted the dire situation, emphasizing the challenges faced by oil marketers in funding operations amidst soaring bank interest rates.
Korie underscored the overwhelming burden faced by operators who are compelled to acquire funds at exorbitant interest rates upwards of 30%, exacerbating financial strain and hindering business viability.
The primary demand voiced by NOGASA is the pegging of the foreign exchange rate at N750/$ to facilitate refinery operations and stimulate the production of refined products domestically.
Failure to address these pressing issues, Korie warned, could result in the withdrawal of services by NOGASA’s over 200 members starting from the next month.
The downstream oil crisis coincides with heightened anticipation for the release of refined petroleum products from the Dangote and Port Harcourt refineries, seen as critical for alleviating supply shortages nationwide.
However, amidst forex crises and inflationary pressures, operators in the oil and gas sector confront mounting economic challenges, necessitating urgent government intervention.
As Nigeria navigates through turbulent economic waters, stakeholders eagerly await decisive action from authorities to salvage the downstream oil sector from imminent collapse and avert potential disruptions in fuel supply chains.
Developers Reject Federal Government’s Cement Price Reduction Agreement
Nigerian Breweries Records $99 Million Foreign Exchange Loss, CEO Reveals
Nigerian Breweries, a subsidiary of Heineken NV, has faced a setback as it disclosed a $99 million foreign exchange loss in its recent financial report.
The revelation was made by Hans Essaadi, the CEO of Nigerian Breweries Plc, during an investor call held in Lagos.
Essaadi attributed the loss to a myriad of economic challenges gripping Nigeria, including the drastic devaluation of the naira and cash scarcity resulting from the nation’s demonetization program.
He explained that the mainstream lager market witnessed a significant decline due to consumers’ inability to afford products like Goldberg after a hard day’s work.
The naira’s depreciation, losing approximately 70% of its value against the dollar since June, has exacerbated inflation to almost 30% in January.
These economic upheavals have placed immense strain on household incomes, especially in a nation where a significant portion of the population lives in extreme poverty.
Despite recording a 9% increase in revenue to 599.6 billion naira, Nigerian Breweries reported a staggering net loss of 106 billion naira for the fiscal year 2023, a stark contrast to the 13.18 billion naira profit from the previous year.
In response to the ongoing challenges, Nigerian Breweries aims to source more raw materials locally to mitigate foreign exchange risks.
The company has also implemented higher product prices effective February 19th to navigate through the turbulent economic landscape.
Despite the bleak financial report, Essaadi affirmed Nigerian Breweries’ commitment to weathering the storm, expressing confidence in the company’s portfolio, processes, and personnel to navigate the challenging market conditions ahead.
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