Chellarams Plc, a Nigerian conglomerate, has reported an after-tax loss of N3 billion for the financial year ended March 2024, driven by naira devaluation, BusinessDay analysis shows.
Compared with an after-tax profit of N4.9 billion in the previous year, the result of Chellarams, makers of Oldenburger, Regal, and Real milk brands revealed that soaring net exchange loss hurt its margins, leading to a net loss.
According to the firm’s latest financial statements, its net exchange loss grew to N2.7 billion in the period ended March 2024 from N121 million in the corresponding period of last year.
Shareholders’ funds stood at a negative of N1.89 billion from a positive N1.1 billion.
The Central Bank of Nigeria (CBN) raised the interest rate from 18.75 percent to 26.75 percent between July 2023 and July 2024 to rein in inflation and stabilise the naira.
Following strong demand for dollars amid scarcity in the parallel market, popularly called the black market, the exchange rate rose to N1,660/$ as of September 6 from N756/$ in July 2023.
A further breakdown of the financial report revealed that the company’s revenue rose during the period from N13 billion to N10 billion.
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“The economy continues to challenge Nigerian business as inflation has affected consumer spending power. As most of our customer base is consumer-facing this has had a knock-on effect on our business. Our team has worked well to maintain sales volumes and we see margins increasing in the first quarter of FY 24/25,” Aditya Chellaram, chief executive officer, said in a report.
He added “We expect this trend to continue and will go a long way in providing profits to the company. We continue to increase the rental revenues at our Isolo property to support our expenses.”
Its subsidiary, Dynamic Industries Ltd, reported the highest revenue of N8.2 billion, followed by the parent company Chellarams Plc with N6.4 billion and Utas Ltd with N1.7 billion.
The CEO highlighted that Dynamic Industries Ltd expanded its capacity this past year and is actively improving its operations for better quality and operational efficiency.
“Margins for FY 24/25 have increased in Dynamic’s segment of Industrial Packaging and will help reverse the exchange losses incurred in this past year.”
“Sales of United Technical and Allied Services Ltd (UTAS) have improved in the past year and we expect that their business will benefit from investments in industrial projects and the nation’s infrastructure. There is a significant improvement in UTAS’s after-market maintenance business,” the CEO said.
Selling and distribution expenses grew to N164 million from N97 million while Administrative expenses dropped to N1.21 billion from N1.29 billion.
Total assets increased to N14 billion from N11.7 billion in the period reviewed.
Cash, cash equivalents, and bank overdrafts at the end of the year dipped to N298 million from N651 million.
Movement in cash and cash equivalents reveals that net cash flow generated from operating activities stood at a negative N291 million from a positive N2.2 billion.
Net cash used in investing activities reported a negative to N830 million from N146 million while net cash flow used in financing activities increased to N657 million from a negative N1.2 billion.
The CEO added, “The management has shown tremendous resilience in an extraordinary year by insulating the company as much as possible to devaluation of the currency.
“In a year where several MNC’s have announced plans to exit their operations in Nigeria, our management is committed to the success of the Company and Group. We are very optimistic of the results for next year,” Chellaram said.
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