Nigeria: Notore Chemical Industries Plc reports N9.9bn operating income in 15 months

Leading agro-allied and chemical company, Notore Chemical Industries Plc has reported an operating income of N9.9 billion in its audited Results for the 15 months ended December 31, 2021.

In a statement signed by its Group Managing Director and Chief Executive Officer (CEO), Ohis Ohiwerei, the company said the period was for rebuilding and repositioning Notore to further deliver on its promise to Champion the African Green Revolution.

According to him, “Though a very challenging period for Notore, it completed the TAM programme during the period. TAM was a critical step taken by the Company to address the drawbacks affecting the stability and reliability of its manufacturing plant, an essential measure to raise production output to meet and sustain its plant’s 500,000 MT per annum nameplate design capacity.

“The completion of TAM, which occurred during the period, has improved reliability and will translate to a significant upturn in the Company’s production output. This achievement will lead to increases in the Company’s cash flows from operations, strengthen its debt service capacity, and generate substantial increases in revenues in the future, an essential key to returning the Company to profitability in the ongoing financial year.

He noted that the company has taken steps to diversify its revenue streams further, adding that the production of its Notore NPK blend of fertilisers has continued to ramp up in output and sales, with increases expected in the ongoing future periods.

He stated “By leveraging on its installed 2,000 metric tons per day NPK blending capacity, and its successful introduction of the Notore NPK brand of fertilisers, the Company is well-positioned for significant growth in revenues and cash flows in the ongoing future.

“Additionally, while leveraging the Company’s seeds business, robust supply chain and distribution network, the Company is expanding further its product offering by going into rice production. The Company has carried out two rice pilot programs as a prelude to its planned launch of Notore rice as a product line in 2023. It is expected that these additional initiatives will further diversify the company’s revenue stream, significantly increase revenues, boost profitability, and contribute considerably to its cash flow.”

Ohiwerei said Notore has taken the steps in its bid to improve working capital and return to profitability, stating that the Company is in discussion with its bankers for a further restructuring of a substantial part of the Company’s short-term loans into fixed long-term loans.

“When concluded in Q2 2022, the loan restructure arrangements are expected to considerably reduce its finance costs and free up cash flows to augment working capital. The Company plans to restructure its capital structure by raising some additional equity capital in Q4 2022. The proceeds will be applied to deleverage its balance sheet to achieve an optimal mix of debt and equity and fund part of planned expansion activities to further reposition the Company for growth.

“The Company plans to carry out a Bond Issuance programme in Q2 2023 after completing its Equity Raise programme and has commenced discussions with a credit rating agency and other financial advisors. The bond proceeds will be used to further reduce and restructure its existing bank debt to reduce finance costs and free up cash flows to augment working capital.

On the outlook for the year, he was optimistic about the growth of Nigeria’s fertiliser sector, noting that the Nigerian fertiliser demand remains robust and is expected to continue to grow, considering the Federal Government’s strong and decisive policy focus on agriculture as one of the keys to unlocking the diversification of the Nigerian economy. The company is well-positioned to take full advantage of this.

“With the TAM programme now completed, Notore expects a significant upturn in its Plant’s reliability and production output. This, coupled with other measures to reposition Notore, is expected to boost revenues, improve cashflows, and facilitate a gradual return to profitability in the ongoing financial year,” he said.