Chellarams squeezed by harsh operating environment

Conglomerate giant Chellarams is getting squeezed by the tough operating environment in Nigeria.

For the year ended 31 March 2015, the company posted a loss after tax of N3.16 billion, from N74.60 million losses recorded the previous year.

Sales reduced by 8.47 percent to N25.06 billion as weak consumer spending continues to slow demand for products.

Chellaram like any other Nigeria manufacturer have had performance dwindled by unrest in the north part of the country that disrupt operations, hike in fuel price due to partial removal of subsidy and the devaluation of the naira that  made imported raw materials very expensive.

Inflation accelerated to 9.0 percent in May from 8.7 percent a month earlier, data from the nation’s statistics bureau show.

The militant group Boko Haram has carried out gun and bomb attacks that killed thousands since 2009 in the mainly Muslim north and the capital, Abuja, to establish Islamic rule.

Chellaram’s cost of sales ratio was as high as N0.91 as huge energy costs continues to swell production costs. It also means the company that manufactures sells and distributes products in Nigeria spent 91 percent of every N1 generated on input costs.

The company’s gross profits were down by 21.67 percent to N2.06 billion in 2015 from N2.63 billion last year. Total assets increased by 9.65 percent from the previous year.

Chellaram’s share price closed at N3.95 on the floor of the exchange while market capitalization was N2.85 billion.

BALA AUGIE