FMF Foods Ltd company chairman says while debates continue around the timing and shape of the economy’s recovery curve, the challenges being faced by businesses in the short term are real and impacting: volatile and high commodity prices, high freight costs and delays in shipment.
Company chairman Ram Bajekal said this was putting pressure on the cost and margins as well as inventory holding cycles and working capital.
According to Mr Bajekal the company managed to increase its revenue during the year by 6 per cent to $217.3 million from $204.9m despite a challenging business environment.
He said the increase in volumes were achieved mainly in the staple foods category whereas the biscuit category saw a decline in volumes.
“Growth has also come from our trading operations, primarily from sale of feed wheat,” he said, in his chairman’s report in the company’s 2021 annual report.
“There has been a surge in commodity prices during the year due to imbalances in demand-supply and higher freight costs which had a negative impact on our margins.”
Mr Bajekal revealed that wheat prices during the first half of the year under review witnessed a significant increase which could not be passed on to consumers.
He added that this increase in input costs, coupled with product mix change resulted in higher material consumption cost.
“However, our continued efforts to keep other overheads in check and bring efficiencies in operations helped offset the lower contribution margins to some extent.
“The group’s net profit during the year at $9.2m was lower by 26 per cent compared to $12.4m of the preceding year.”
