FUND COST KNOCKS OUT LIVESTOCK FEEDS.

By growing operating profit by 27.3% from only 17.1% increase in total income, Livestock Feeds PLC, was not doing badly but the knock out punch from finance charges reversed this into year end profit drop.
According to the audited figures released recently, Livestock Feeds grew its operating profit from N609.9m to N776.7m by recording 16.6% rise in cost of sales from N6924.7m to N8071.6m.
More importantly, by decreasing marketing and distribution costs by 6.67% to N191.6m from N205.3m and by holding administration expense growth to only 9.85% to N281m from N255.8m.
All these did not quite bother the increase in total income growth to N9366.3m from N7998.5m as income from other sources 340.4% increase to N357.6m and finance income rise to N45.5m from N2.79m boosted the 13.3% increase in core revenue to N8963.3m from N7914.5m.
Meaning that Livestock Feeds was heading for year end profit growth but for the 147.9% increase in finance expenses from N210.5m to N521.9m that derailed the train.
Thus, the company settled for 25.4% drop in profit before tax to N300.1m from N402.2m in 2014.
This came to only N3.2 gain on each N100 income in 2015 compared to N5.03 in 2014.
SO:
* The real surprise was perhaps that the punch must have been unexpected because short term borrowings actually dropped from N1926.9m in 2014 close to N525.3m.
* Hence all things being equal, all that Livestock Feeds needs to do in 2016 is keep the lid on costs  while striving to grow revenue once again.