Notore posts N4.6b half-year operating profit

Notore Chemical Industries Plc has reported an operating profit of N4.63 billion for the half-year (H1) ended March 31, 2019, representing 4,251 per cent rise compared with the N11 million achieved in same period of 2018.

The unaudited six months performance however showed that revenues fell to N12.68 billion in 2019, compared to N15.17 billion in H1 2018, indicating a decline of 16.03 per cent.

Notore, in a statement, attributed the decline to mainly plant downtime during the period under review as a re result of a turn-around maintenance (TAM) programme.

The firm said the TAM would be completed by first quarter (Q1) of   2020, after which the plant will operate at its nameplate capacity.

Cost of sales also fell from N11.404 billion in 2018 to N9.636 billion in 2019, while cost of sales margin variation over the two periods, H1 2019 and H1 2018 was minimal at 0.80 per cent increase. This is because natural gas, which constitutes 90 per cent of the input cost, excluding plant depreciation, has a fixed unit price under a 20 year gas contract.

Despite the growth of 4,251 per cent in operating profit, Notore ended the H1 2019 with a loss of N1.942 billion due to net cost of N6.57 billion compared with N5.144 billion in 2018.

Reviewing the operational and market developments in the H1, Notore said 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 economic diversification.

“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 Organisation.

Furthermore, 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,” the company said.
Looking ahead, Notore assured it would exceed its 2018 financial year (FY) urea production figures in 2019, given current fertilizer policies, and the fact that demand for NPK and NPK specialty blends are quite favourable for its business.
“Consequently, Notore will be producing a significant quantity of NPK and NPK specialty blends this FY to boost its revenues as well as diversify it from urea fertilizer. To enhance profitability, Notore is working on financial initiatives to reduce its finance cost considerably,” it said.