Fan Milk Ghana reports massive decline in full year profit dropping by 97% due to COVID-19 pandemic

GHANA – Fan Milk Ghana, subsidiary of multinational food-products corporation Danone has reported a 12% decline in full year revenue to GH¢373.58 million (US$64.9m), despite improved demand for the company’s products in the final quarter of the year as consumer confidence recover.

The decline in turn-over is attributed to the unfavourable performance in the earlier part of the year as a result of the coronavirus pandemic, which significantly limited the movement of company’s sales representative who use bicycles to penetrate communities and local markets.

Fortunately, the management kept a tight lid on expenses in the midst of the pandemic, reports Ghana Web.

Firstly, the cost of sales dropped marginally by 0.2 percent year on year, partly due to the relative stability of the Ghanaian cedi (-3.9 percent) against the United States dollar that helped to limit the cost of imported raw materials.

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Fan Milk Ghana’s profit after tax went down by 97.6 percent year on year to GH¢0.60 million (US$104,000) in 2020

In addition, operating expenses dropped by 15.3 percent year on year to GH¢121.79 million (US$21.17m) in 2020 on the back of a significant cut in administrative expenses which dropped by 33.7% year on year.

Consequently, the operating expense ratio moved down by 130 basis points to 32.6 percent in 2020 from 33.9 percent in 2019.

However, the company’s earnings were ultimately affected the decline in the top line.

Profit before tax slumped by 97.9 percent year on year to GH¢0.80 million (US$139,000) while profit after tax went down by 97.6 percent year on year to GH¢0.60 million (US$104,000) in 2020.

Fan Milk produces a range of frozen strawberry yoghurts, chocolates, ice cream, snacks, ice lollies and citrus drinks under the following brand names; FanYogo, FanChoco, FanIce, FanDango and FanPop.

Meanwhile, its sister company in Nigeria has inked a partnership agreement with the government of Ogun state to undertake a backward integration project to enhance local dairy production.

As part of the project, Fan Milk has laid the foundation for establishment of a world-class Model Dairy Farm and Training Institute at Odeda Farm Institute, bringing the expertise of its parent company to the fore.

The technical institute developed will train local dairy farmers and improve their skills while the dairy farm will also incorporate pasture development.

The partnership agreement is aimed to improve the local farmers and community participation in dairy farming, with a target of 1.4 million producing litres of milk in the next 24 months.

Danone is a world class, leading food and beverage company with recognized expertise in fresh dairy products in over 120 markets worldwide, including in Africa I.e., Morocco, Algeria, South Africa and Egypt and also, through joint ventures with local partners, Kenya, Uganda & Tanzania (Brookside) and Tunisia (Stial/Delice Danone).

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