Chellarams profits down 33% in FMCG division

Aug 4, 2017

Chellarams profits down
Chellarams profits from its FMCG range were down 33% for the financial year ended last March. The company’s net income increased, however, to US$911,000.

Nigerian conglomerate Chellarams announced its full year results earlier this week. In a message to shareholders top management said that Chellarams profits originating from its packaged dairy products were down by 33% to  ₦1.35 billion ($3.7 million) from last year’s  ₦2 billion ($5.49 million).

The fall in profits was largely due due to a 39% year on year fall in sales. Likewise, Chellarams ingredient business fared poorly with sales down by 63% to  ₦693 million ($1.9 million).

The FMCG and ingredient divisions jointly make up 37% of Chellarams’ sales. Its Oldenburger, Regal and Real milk brands are some of the company’s most famous products in its FMCG range.  Bulk branded milk, which Chellarams sells mainly to other manufacturers and processors, constitutes the greater part of its ingredients business.

Last June, the company made headlines when it announced a new strategic joint-venture called Chellarams DMK Limited, alongside its existing partner, the German dairy company DMK Limited. The new agreement is meant to increase the exposure of dairy products in the Nigerian market with investments in the development of better and more comprehensive distribution networks.

Chellarams has attributed its fall in profits to the tough trading environment in Nigeria and the ongoing economic recession. The Nigerian government’s monetary policy and the devaluation of the naira have increased the price of imports for manufacturers and, simultaneously, the scarce availability of foreign exchange has had manufacturers struggle with input costs.

Despite the results in the FMCG and ingredients divisions, the group’s overall net income rose by 113% to ₦334 million ($917,584).

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