Turnaround maintenance of plants boosts Notore’s revenue, profit

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Turnaround maintenance
Notore Chemical Industries Plc released its 2022 half-year result posting revenue of N26.2 8 billion as against N9.43 billion reported in nine months of 2021 and profit before tax of N2.6billion in H1 2022 from N15.85billion loss reported in nine months of 2021.

The fertilizer-producing company performance in the period under review showed an impressive performance with its 500,000 Metric Tonne Urea Plant and a 600,000 Metric Tonne of NPK Blending Plant in Onne, Rivers State, Nigeria.

Over the last five years, it has wallowed in debts and suffered severe revenue declines, as it was unable to produce at full capacity.

In 2019, the company decided to embark on major turnaround maintenance of its plant, which was completed in 2021 after Covid-19 induced delays.

The breakdown of revenue revealed that Urea and other chemicals grew by 311.07 per cent to N24.97billion in six months of 2022 from N6.07billion reported in nine months of 2021, while revenue from NPK dropped to N639.46 million in six months of 2022 from N2.27billion reported in nine months of 2021.

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Analysis by geographical location revealed that revenue within Nigeria grew significantly by 27.9 per cent to N11.57 billion in six months of 2022 from N9.05billion reported in nine months of 2021, while revenue outside Nigeria moved from N388.8 million in nine months of 2021 to N14.72billion in six months of 2022.

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The company has also stepped-up efforts to diversify its revenue base with its installed 2,000 metric tons per day NPK blending capacity. They are also ramping up their seeds business producing about 5,000 50KG bags of rice in 2021.

Despite all these positives, the company’s biggest challenge is its external debt obligations, which according to its latest results, is currently about N130 billion.

The company stated that the Dollar portion of the loans increased slightly by 0.81per cent from 2021 financial year mainly from the impact of the Naira devaluation on USD-denominated loans while the proportion of long-term loans to total loans increased to 85 per cent from 62 per cent in 2021FY, resulting from the restructuring of short-term loans to long term as part of the financial initiatives taken by the company.

Compared to net equity of about N55.6 billion, the company is in substance owned by the banks and not the shareholders.

“This is why out of the operating profit of N10.2 billion declared in the first half of this year over 80 per cent of it went towards servicing debts. Until Notore pays off its debts, any money it makes from its fertilizer plants will go towards meeting its debt obligations to the bank of industry, Afexim, and its external creditors. The company’s dollar-denominated loans are currently over $100 million.

“Notore Chemical Industries needed foreign exchange to keep defraying its loans and paying for factors of production that require imports. No surprise it incurred zero exchange rate losses this year so far, compared to N268.2 million in the first six months of 2021,” the company explained.

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