The National Flour Mills (NFM) has recorded a loss of $1.7 million for the first nine months of the financial year, according to its unaudited results.
The results could have been worse had NFM not raised the price of its major commodity, flour, and the company noted the price increases implemented earlier this year helped to grow revenue up by 16.1 per cent from $319.7 million in Q3 2021 to $371.2 million.
However, the NFM said this was not sufficient to off-set the increased cost of sales, and even though its indirect expenses remained relatively stable over the period, operating profit decreased by 57.5 per cent compared to the prior year.
The company also cited several external factors impacting business.
It noted the Russia-Ukraine war, the slowdown of the Chinese economy and rising geopolitical tensions across the globe continued to impact global supply chains and the cost of food and fuel, leading to surging inflation in almost every country in the world.
In addition, the impact of climate change, in the form of increased rainfall in some areas and drought in others added more complexity to the operating landscape.
Climate change has already adversely affected the global supply of wheat, the NFM also noted, adding that droughts and excessive heat in North America and India have resulted in demand exceeding supply for wheat which led to price escalations so far this year; a trend the company expects to continue.
“The issues above impacted our operations with cost of sales increasing by 21.4 per cent year-on-year, up from $256.7 million to $311.9 million,” the company said.
Notwithstanding these challenges, the NFM said significant efforts were made to increase inventory levels to ensure a reliable supply to customers, with delivery of products meeting all on time and in-full benchmarks.
In addition, the company is investing in plant and equipment to ensure it provides safe, quality food and feed products for customers as it continues on the journey to SQF Level Three Certification.
“The increase in accounts receivables was a direct result of the price increase implemented this year and the attendant increase in credit limits for our customers. We wish to assure all our stakeholders that despite these challenges, we continue to explore additional avenues to serve our customers, add new customers, locally and regionally, diversify our product revenue streams and improve the efficiency of our operations,” the NFM added.