Feed Subsidiary Invests in Supply Chain to Enhance Competitiveness

NIGERIA - Livestock Feeds Plc, a subsidiary of UAC of Nigeria Plc, has announced that it is currently investing in its supply chain operation to drive further growth, and enable it deliver better value to all stakeholders.
calendar icon 5 June 2017
clock icon 4 minute read

The Chairman of the company, Larry Ettah, while addressing shareholders during the company’s 2016 yearly general meeting held in Lagos, said the company, in a bid to foster efficient supply chain operations, has installed massive storage facilities across the agro-ecological zones.

TheGuardian reports that according to him, going by the seasonality of its production raw materials, the storage facilities would enable the company to take advantage of cheaper market prices during harvest seasons.

“One of such projects is the recently commissioned 5,000 metric tonnes Silo installation in the Aba factory. This facility is expected to position the company at a vantage position over and above competition to increase our market share in the Eastern operation through constant product availability at better prices.”

Mr Ettah explained that the company posted revenue of N11.1 billion, representing a 23 per cent growth over last year’s result. However, due to high cost of raw materials, forex scarcity and other limiting factors, cost of sales, according to him, witnessed a 25 per cent increase over 2015.

“Despite the increased costs, operational profit was 24 per cent higher than the prior year. Profit before and after tax however declined on 2015 due to the absence of the extraordinary income made from the gains on disposal of our former Kaduna plant in 2015. Consequently, profit before tax was N223.9million, a 25 per cent decline on 2015 while profit after tax declined by about 19 per cent to N152.3million.”

Mr Ettah noted, “In view of the above results, no recommendation is made for dividend payment in order to conserve funds for the increasing cost of operation and to execute our 2017 growth plans.”

On the feed milling industry, the Chairman said 2016 was a challenging year for most sectors, with the industry in Nigeria having its fair share of the tough times.

“Chief among the myriads of challenges faced by the industry during the year was acute shortage of raw materials especially the energy sources as reflected in the high cost of maize, and those of its close substitutes and derivatives. The price of maize for instance, moved up by almost 75 per cent from 2015 to 2016, while fiber materials prices also skyrocketed.

“The shortage of these materials was significantly attributed to low farming activities in the Northern part of the country arising from prevailing insurgency and increased export activities. The acute shortage of foreign exchange also led to scarcity and huge increases in the prices of the imported inputs.

“The high cost of raw materials fueled high cost of feeds, thereby occasioning frequent price increases which became unbearable for poultry farmers. Consequently, many small-scale farms shut down, while big farms managed to weather the storm by employing various cost saving strategies.

“In the final analysis, the poultry industry, which is key to the livestock sub-sector, experienced a serious reduction in bird population. This unfortunate development also negatively impacted the sales volume of the feed milling industry,” he added.

Also speaking at the event, an independent shareholder, Nona Awoh,urged the company to find ways of improving local substitutions by engaging in research programmes.He also tasked the management of improved performance and good dividend payout in the current financial year.

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