Nigeria’s leading agro-chemical firm, Notore Chemical Industries Plc, increased its operating profit from ₦0.11billion in the firsthalf of 2018 to ₦4.63 billion for the six-month period ended 31st March 2019.
That resulted in in a 4,251percent growth, the company said in a filing to the Nigeria Stock Exchange.
The growth, the company said, was largely attributable to the recognition of asset revaluation gains.
The company, however, recorded revenues of ₦12.68 billion within the period, compared to the ₦15.17 billion it realised during the corresponding period in the first half of the 2018 financial year.
Notore attributed the decline to plant downtime during the period under review.
“TheTurn-around maintenance (“TAM”) programme activities are expected to be completed by Q1 2020, after which the plant will operate at its nameplate capacity,” the company said.
“Notore’s cost of sales margin variation over the two periods, H1 2019 and H1 2018 FY was minimal at 80bps increase, because natural gas, which constitutes 90% of the input cost, excluding plant depreciation, has a fixed unit price under a 20 year gas contract.”
Despite the positive Operating Profit, details showed that Notore recorded a loss of ₦1.94 billion during the period because of its net finance cost of ₦6.57 billion.
The company in its assessment of its market and operational developments said the Nigerian fertilizer demand is quite robust and is expected to continue to grow because of the Federal Government’s agenda to use agriculture as one of the keys to unlock the diversification of the Nigerian economy.
It added that the domestic fertilizer market is yet to reach its full potential as the consumption of fertilizer per hectare of arable land in Nigeria is below 10kg compared to the 200kg recommended by Food & Agriculture Organization.
“Furthermore,” it said, “the demand for urea and compound fertilizers, such as NPK, from the West African markets and Sahel African states is also quite significant. Notore sold all the urea that it produced during the period under review.”
Commenting on its outlook for the year, Notore said it expects to exceed its 2018 financial year urea production figures in 2019.
The current Federal Government policies in the fertilizer space and demand for NPK and NPK specialty blends are quite favourable for its business, it said, stressing that Notore will be producing a significant quantity of NPK and NPK specialty blends to boost its revenues as well as diversify it from urea fertilizer within the year.
“To enhance profitability, Notore is working on financial initiatives to reduce its finance cost considerably,” the company said.