Livestock Feeds Invests in Supply Chains to Boost Performance

In order to enhance its growth and deliver better value to all stakeholders, Livestock Feeds Plc, a subsidiary of UAC of Nigeria Plc is investing in its supply chain operations.

Chairman of Livestock Feeds Plc, Mr. Larry Ettah disclosed this yesterday at the annual general meeting (AGM) of the company in Lagos.

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

Ettah said: “Despite the increased costs, operational profit was 24 per cent higher than 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 N223.9 million while profit after tax declined by about N152.3 million.”

The chairman noted, “that 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.”

Speaking on the feed milling industry, Ettah said economically 2016 was a challenging year for most sectors while the feed milling industry in Nigeria had 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 fibre 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,” he said.

Ettah noted 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 said.

Speaking on the outlook for 2017 said they are seeing an alarming and unprecedented scarcity and high cost of energy source materials in 2017.

According to him, there has been an increase of about 100 per cent in the cost of raw materials.

“We, however, remain undaunted in our resolve to run a profitable operation.In its bid to foster efficient supply chain operation going by the seasonality of its raw materials, your company put in place massive storage facilities cutting across the agroecological zones 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,” Ettah said.