Review of 2008
As discussed in the Chairman’s report our performance for 2008 showed some improvement over that of the preceding two years. Sales increased by 92% over 2007 and 74% over 2006 and our operational loss position improved from $50.8 million to $0.6 million. Our main focus during the 2008 financial year centred on returning our core business operations to profitability. This was achieved in our flour and dry mix operations. However, while our animal and poultry feed operations showed improved performance over 2007, this division did not record a profit in 2008. During the year, the Board also took a decision to cease the Food Import and Distribution programme as this programme continued to be a drain on our resources.
We at NFM recognize that there is still a lot that has to be done in order to achieve a complete turn around of the Company and in 2009 our focus will be maintaining the gains achieved in our segments which performed well and improving those business segments that performed below par in 2008 so that they will become profitable in 2009.
Plans for 2009
Grain Purchasing
While there has been a general decline in grain prices, there continues to be some day to day volatility in the grain market. As a result, the Company will continue the vigilant monitoring of these markets and the prudent utilisation of various hedging techniques to ensure that grains are purchased at the best possible prices.
Flour, Dry Mixes and Traded Products
In the flour market, NFM continues to develop and nurture partnership arrangements with key wholesale customers and these arrangements will be further strengthened in 2009. We are mindful of the effect that the turbulent economic times will have on our retail customers and so we will continue our efforts to improve our existing products and adjust our blends to ensure that we continue to have the highest quality products at reasonable prices.
While our dry mixes and other traded products do relatively well, we recognize that there is need to build the brand awareness of some of these products and concentration will be placed on this in 2009.
Animal and Poultry Feeds
Some of our feeds, notably dog food did well in 2008, however others floundered and in 2009, our thrust will be on regaining market share lost in local and regional markets. Feed formulations and prices have been adjusted to be more competitive and during the first half of 2009 we will be re-launching our brands in various regional territories.
We will also be increasing our efforts to form key alliances with major users of animal and poultry feeds. In early 2009 for example, we partnered with a major milk producer to launch a new less expensive dairy formulation which although cheaper, maintains milk volumes without compromising quality. These initiatives will be expanded to other market segments.
Distribution and Delivery
As part of our efforts to improve our efficiency, we strengthened our delivery fleet in 2008 and in 2009 will continue to make improvements to ensure that all deliveries are made on time and in full.
Corporate Citizenship
In spite of the challenging times faced by the Company in 2008, we continued to discharge our responsibility as a Corporate Citizen through assistance via product donations to various charitable organisations such as children’s and senior citizens homes and organisations and homes for those who are differently abled.
Acknowledgement
We are optimistic about the future of the Company and we remain confident that National Flour Mills will return to profitability in 2009 through the implementation of the strategies outlined above.
I wish to take this opportunity to thank the Chairman, members of the Board of Directors, the Management Team and employees for their support and commitment during what was another very challenging year for National Flour Mills Limited.
The Chairman’s review has discussed in detail the major issues that affected the organization last year and the present challenges in 2008 and beyond. The after tax loss of $42.1 million for 2007 was a stark reminder of the difficulties still facing the Company at this point in its progress. I would like to focus in some more detail on these challenges and the strategies that we as a management team have implemented.
Gillian Pollidore
Chief Executive Officer (Acting)