FrieslandCampina WAMCO Nigeria Plc, a firm engaged in the manufacturing and marketing of evaporated milk, instant milk powder, ready to drink beverages and other dairy based products, saw a 29 percent slide in profits in 2020, as a result of rising finance costs.
WAMCO reported after-tax profits of N8.778 billion for the latest financial period, compared to N12.364 billion in 2019.
This comes despite a 23.2 percent jump in revenues for the period to N199.5 billion, from N161.83 billion in 2019.
WAMCOs current and non-current loans and other borrowings surged by 3,332 percent to N71.6 billion in 2020, compared to N2.086 billion in the earlier period. This led to a 168 percent rise in finance expenses for the period to N5.94 billion, compared to N2.21 billion in 2019.
The dairy products maker was also hit by rising producer prices, as cost of sales increased by 30.6 percent in the period to N159.2 3 billion, leading to a contraction in gross profit margins to 20.1 percent, compared to 24.6 percent in the earlier period.
Acquisition of Nutricima’s dairy business
Frieslandcampina WAMCO completed the purchase of Nutricima’s dairy business in Nigeria during the 2020 financial year.
In March, Frieslandcampina and PZ Cussons signed an agreement regarding the acquisition, leading to Nutricima’s dairy business now being integrated into Frieslandcampina WAMCO Nigeria PLC.
Frieslandcampina WAMCO acquired Nutricima Limited’s production facility in Ikorodu, Lagos State and the brands Olympic, Coast and Nunu, a range of powdered, evaporated, and ready to drink milk products.
These brands have a good presence across the Nigerian dairy market.
“The acquisition underlines Frieslandcampina WAMCO’s continued commitment to contribute to the development of the Nigerian dairy sector. The acquisition satisfies the need for additional production capacity for Frieslandcampina WAMCO to meet the growing demand for locally produced evaporated and powdered milk by Nigerian consumers,” WAMCO said.
WAMCO shares can be bought on the NASD Plc exchange, where it traded at N132.80 per share on Thursday for a market capitalisation of N129.657 billion.
The NASD OTC market has a total market capitalisation of N527.98 billion for all securities listed on it, meaning WAMCO has a 24.5 percent weighting on the NASD.