Livestock Feeds, an animal feed manufacturer has struggled to turn in profit as a high-interest rate environment created by the Central Bank of Nigeria’s hawkish posture, as well as skyrocketing inflation, continues to impact the firm’s operations.
Data obtained from the nine-month financial results available on the Nigerian exchange Group shows that the very challenging environment caused LiveStock Feeds to report a loss of N209.74 million during the period from a profit of N420.56 million in the nine-month period of 2022, making it the first loss reported since the nine-month period of 2019.
Furthermore, the animal feed manufacturer reported the loss despite its revenue being the highest in eleven years, and this was due to cost of sales claiming 92 percent of its total revenue during the period. Total revenue reported grew by a steep 4.31 percent to N11.18 billion in the nine-month period of 2022 from N10.72 billion in the nine-month period of 2021.
Rising input costs have proven to be a thorn in the flesh of Livestock Feeds as data shows that cost of sales also claimed 91 percent of its total revenue reported in the first quarter (Q1), 93 percent in the second quarter (Q2), and 94 percent in the third quarter (Q3) of 2022.
The firm’s reported finance costs were also found to be a significant contributor to the reported loss, increasing significantly by 169 percent to N474.57 million in the nine-month period of 2022 from N176.37 million in the same period of 2021 as a result of the increase in interest rates that affected loans and borrowings.
Its operating expenses (OPEX) increased by 26 percent to N625.74 million in the nine-month period of 2022 from N496.63 million in the nine-month period of 2021 on the back of a 33.69 percent increase in administrative expenses to N486.29 million during the period (9M’2022).
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Its administrative expenses grew on the back of a 466 percent boost in consultancy fees which amounted to N121.56 million during the period (9M’2022).
Total assets and total shareholders’ equity reported by the animal feed manufacturer declined by 5.85 percent and 8.38 percent respectively to N10.19 billion and N2.29 billion in the nine-month period of 2022 from N10.83 billion and N2.50 billion in the nine-month period of 2021.
Its total cash and cash equivalents also declined by 5.64 percent to N324.92 million in the nine-month period of 2022 from N344.34 million in the nine-month period of 2021.
Movements of its cash and cash equivalents show that the firm generated N5.63 billion from its operations in the nine-month period of 2022, up 675 percent from N726.37 million, indicating that they increased its ability to cover its short-term obligations during the period.
Its net cash flow from investing activities was negative during the period amounting to N158.82 million due to N111.65 million and N49.18 million spent on the acquisition of intangible assets and property, plant, and equipment respectively.
Net cash flow from financing activities was also negative, amounting to N5.44 billion during the period due to N9.48 billion spent on repaying loans and borrowings.
One of the tier-one lenders, First Bank of Nigeria Limited, has said henceforth it would request at least 60 days to process the foreign exchange (FX) requests of customers.
In a statement sent to its customers on Wednesday, December 28, 2022, the bank, however, did not specifically disclose the maximum period the forex purchase would be successful. It also did not clarify if the 60 days are calendar days or working days.
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