Notore Chemicals, one of Nigeria’s major fertiliser and agro-allied companies was expected to benefit from the supply-side constraints experienced in the fertiliser industry in 2022 which led to a surge in demand and fertiliser prices.
However, data obtained from the full-year financial results of the agro-allied company available on the Nigerian Exchange Group reveal that despite fertiliser prices nearing a decade high, Notore reported its highest loss in six years amounting to N16.22 billion in 2022.
The loss dipped further by 69 percent from a loss of N9.58 billion reported in 2021 on the back of net finance costs claiming 325 percent of the firm’s operating income.
Net finance costs amounted to N23.43 billion in 2022, 11.35 percent up from N26.43 billion in 2021.
Furthermore, the loss reported by the fertiliser company was despite the 29 percent growth in revenue during the period to N33.19 billion in 2022, up from N25.71 billion in 2021, with infrastructure services being the primary driver of the growth.
Infrastructure services grew by 338 percent to N972 million in 2022 as against the N222 million reported in 2021, while urea grew by 41.28 percent to N29.41 billion in 2022 from N20.82 billion in 2021.
Other product lines such as NPK, and ammonia were down by 37.9 percent and 58 percent to N2.65 billion and N166 million respectively in 2022.
The company’s export sales also grew by 280 percent, accounting for 53 percent of the total revenue reported by the company, while its local sales were down by 25.7 percent, accounting for 47 percent of total revenue.
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Despite inflation being a global menace, the firm’s cost of sales was down by 8.59 percent to N26.49 billion in 2022 compared to N28.98 billion in 2021.
Operating expenses (OPEX) also declined by 1.02 percent to N7.09 billion in 2022 from N7.16 billion in 2021, with selling and distribution expenses being the main culprit for the decline.
Its selling and distribution expenses dipped by 30.51 percent to N189 million in 2022 from N272 million in 2021, while its administrative expenses dipped by 0.15 percent to N6.9 billion in 2022.
With the aim of recovering from its expenses, the agro-allied company generated other income totaling N7.59 billion in 2022. The amount is, however, a 55.69 percent decline from N17.13 billion reported in 2021.
Its total assets grew by 13.54 percent to N270.92 billion in 2022 from N238.62 billion in 2021, while total shareholder’s funds grew by 12.97 percent to N59.91 billion in 2022 from N53.03 billion in 2021.
Notore Chemical reported negative cash and cash equivalents totaling N1.11 billion in 2022, indicating that the firm’s cash outflow is more than its inflow.
Movement of the cash and cash equivalents reveals that the fertiliser company’s net cash flow from operating activities for the period amounted to n14.02 billion, indicating that the first is generating enough cash from its core business activities.
However, the cash generated from its core business activities declined by 10.47 percent from N15.66 billion in 2021.
Net cash flow from investing activities for the period was negative totaling N2.95 billion, due to the N2.41 billion, N282 million, and N273 million spent in the purchase of property, plant, and equipment, investment property, and right of use respectively in 2022.
Net cash generated from financing activities was also negative during the period totalling N9.92 billion due to repayments of borrowings, and interest paid amounting to N11.53 billion and N23.3 billion respectively.
Notore Chemicals declared earnings per share of N-10.07 per share in 2022 from N-5.94 per share in 2021.
