FrieslandCampina develops contact with global input suppliers, taps into FX
The diary maker FrieslandCampina Nigeria plc developed contacts with global raw materials suppliers in 2015, while also converting its foreign exchange loans into naira.
Rahul Colaco, managing director, FrieslandCampina WAMCO, disclosed this to select journalists at the company’s corporate head office in Ikeja, Lagos, weekend.
Colaco disclosed this while explaining the relatively good performance posted by the diary maker in 2015 in the face of economic lull in the country.
The company’s financial statement shows that though turnover fell by 4.5 percent, from N126.44 billion in 2014 to N120.72 billion in 2015, profit after tax rose 13.3 percent to N18.60 billion, from N16.50 billion in 2014, owing to cost-cutting measures adopted by the company.
According to Colaco, the manufacturer of Peak, Three Crowns and Friso milk brands developed good contacts with raw milk suppliers globally, while also taking advantage of oversupply resulting from weak international milk prices.
“We took advantage of the foreign exchange. We converted our forex loans to naira loans. We took higher interest cost. However, we got lower devaluation cost and that helped in the bottom-line,” the MD explained in a post-43rd annual general meeting interview.
He said the diary maker equally effectively managed taxes within the year, taking advantage of available incentives, stressing that the company remains one of the best performing units internally, a fact that has been attested to by external organisations.
He said the firm launched milk products in small packs, which ranges between N20 and N40 by end of last year, adding that his team will continue to drive innovation through new launches.
The firm now has 15 million admirers in the digital space, the managing director said, adding that the company is in the country for the long-term and invests N4 billion in expansion annually.
“Last year, we launched a new route to market and set up means to reach outlets directly. We have 7,000 outlets across Nigeria, and we deployed 1,300 salesmen across the country,” he revealed, adding that the FrieslandCampina WAMCO Nigeria plc has achieved 1247 days without an accident.
“We feel a bit more secure because of our position, our balance sheet and position in the market. But we will continue to take measures to manage costs and risks,” the MD stated.
He said the diary maker works with more organised herdsmen in Oyo State, adding, however, that shrinking consumer budgets and economic lull affected many manufacturers in 2015.
Owing to challenges of poor quality of local milk, poor cattle management, among others, diary makers source most of their raw materials abroad.
FrieslandCampina is not an exception, as it sources only 30 percent of inputs locally.
“The fact is that Nigeria does not have a local diary industry. We need to think of how to localise diary inputs in the country,” he added.
Explaining the just released financial statement, Jacob Moyo Ajekigbe, chairman, board of directors of the firm, said the company’s pedigree in maintaining excellence was advanced in 2015, as it took the initiative to train its key business partners on best-in-class quality assurance standards to safeguard the high quality of the its products through the value chain, from grass to glass, which led to waste reduction.
Ajekigbe admitted that 2016 may not be rosy for the company, owing to forex constraints, urging for the right mix of fiscal and monetary policies to stimulate the economy and attract domestic and foreign investments.
ODINAKA ANUDU