Chellarams sales decline worsen in full year as competition, rising cost takes its toll

Chellarams Plc, on Monday reported its financial results for the full year ending 31 March 2018. The diversified conglomerate with interests in the importation and manufacture of dairy products, industrial chemicals and turnkey equipment for the foam and mattress industry said that total group sales declined by 30% to ₦8.7bn from ₦12.4bn in 2017.

The company which is an active player in the dairy industry said that its combined FMCG and bulk milk ingredients business fell by 40% to ₦2.7bn from ₦4.5bn in the previous year. Its FMCG business alone which includes packaged Oldenburger, Regal and Real milk brands, as well as its Real Active malted food drink suffered a decline of 65% to ₦1.3bn from ₦3.8bn in 2017.

The Ingredients segment which consists of bulk branded milk sales to other manufacturers and food processors saw a 102% increase in sales to ₦1.4bn from ₦692m in the previous year.

Segment Revenue 2018
REVENUE 2018 2017 % Change
FMCG 1,326,432.00 3,840,876.00 -65%
Industrial Chemicals 2,449,206.00 2,728,452.00 -10%
Ingredients 1,399,970.00 692,789.00 102%
Cycles 76.00 204,340.00 -100%
Machinery 2,287,033.00 1,110,955.00 106%
Plastic film 1,270,268.00 3,822,990.00 -67%
TOTAL ₦8,735,003.00 ₦12,402,419.00 -30%

Chellarams announced last June that it had entered into a new strategic joint-venture agreement with its long-time business partner, German-based dairy producer, DMK Limited to form a new venture called Chellarams-DMK Limited, with the purpose of producing and marketing Chellaram’s dairy brands in Nigeria instead of importation.

The firm’s sales have suffered due to rising raw materials dollar denominated costs, stiff competition in the dairy business and high administrative costs. The company noted in its financial report that it had discontinued its dollar denominated term loans and entered into new loan agreements denominated in Naira.

Chellarams said that its entire group pre-tax profit fell by 53% to ₦269m for the year, from ₦568m in the previous year. Net profit for the group stood at ₦201m versus ₦334m in 2017. The FMCG segment recorded a pre-tax loss of ₦400m, while the Ingredient segment posted a pre-tax profit of ₦144m.

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