Fan Milk returns to profit ways after 2 years

Fan Milk Plc has managed to bounce back from a loss position to record double digit profit in the first half of the year.

The company posted a net profit of GH¢16.8 million in the period under review as compared to a loss of GH¢4.3 million the same period last year.

Cash generated from the company’s operations was also in the positive as it turned from a negative of GH¢64.3 million to a positive GH¢1.5 million in the first half.

The improved performance of the Fan Milk Plc has also shown a double digit growth trajectory throughout the first half of the year. 

For instance, the company also managed to grow its revenue by 14 per cent compared to same period last year. 

Again, the company which is the most dominant player in its space, posted operating profit of GH¢ 20.1 million compared to a loss of GH¢4.9 million in same period last year.

According to the financial statement of the company posted by the Ghana Stock Exchange (GSE). The growth is driven by the focus on the four major strategic pillars aiming at ensuring that the outdoor channel grows profitably, accelerating the indoor channel, growing Ice Cream brand and promoting the export business. 

Meanwhile, as in the case of many other businesses in the country which continue to suffer the grave consequences of an unstable local currency against the major foreign trading currencies, the company said its costs “continue increasing because of the continued weakening of the local currency and high inflation.”

Inflation which has hovered above the 40 per cent mark has also had negative impact on businesses across board and with no end in sight, it is expected that business will have to readjust to navigate the difficult and unpredictable terrain.

The gross profit increased by 37 per cent compared to last year same period while the gross margin improved by 5.4 per cent as a result of what the company described as a “better product mix, price increase compared to same period last year, and most of all as a result of the excellent work on productivity with initiative like the use of biomass energy.

How 2022 ended

Fan Milk faced a difficult 2022 financial year as the company’s financials and share performance on the local bourse suffered significantly.

From a net loss position of GH¢13.4 million at the end of the year 2021, the company, once the toast in the market, posted another loss of GH¢41.6 million in the year under review. 

The amount is thrice more than that of the previous year.

The price of the company’s shares also suffered a major hit after it fell on the GSE at the end of last year. 

It dropped by a whopping 25 per cent from GH¢4.00 in January 2022 to GH¢3.00 per share on December 31, 2022.

Dividend

As a result of the challenging financial position, the expectation of shareholders to have some dividend paid to them for their investment in the company was dashed as the directors failed to recommend any such payment for the year ended December 31, 2022.

Optimism paying off

The determination of the Managing Director of the company, Ziobeieton Yeo, seem to be paying of as the measures to turn the corner is paying off as demonstrated in the first half results of the company.

He had admitted in his annual report for last year, that at the onset of the year 2022, “Our business was invigorated by our unwavering mission to promote good health through food, with a view to reaching as many individuals as possible.”

He said throughout the remaining months of the year, the company continued to strengthen its core pouch business while executing its flagship programme, the FanMilk Schools caravan, which had been dedicated to promoting healthy snacking and sanitation. 

Customer service development

Mr Yeo said the company’s distribution network continued to serve as a critical component of its growth strategy, as it enabled it to fulfil its commitment to making its brands widely available throughout the country.

The company made significant investments in forging stronger partnerships to promote growth, and continued to capitalise on its unique RTM, which is made up of 29 key distributors and over 800 agents.

As a performance-oriented business, the company incentivised 406 agents and key distributors (KDs) through the 2022 ‘Akyede Kese Reloaded’ Promo to encourage trade partners to increase sales while investing in their businesses, a commitment which is yielding some positive results as shown in the period under review.