Fan Milk’s revenue dropped by 19.1%y/y to GHS267.12 million in 9M-2020 on the back of the impact of the coronavirus pandemic, which significantly limited the movement of people including the company’s sales boys who use bicycles to penetrate communities and local markets. However, since the lockdown in Q2, we have seen rising consumer confidence that could help the company to make up for some of the lost revenue in the final quarter of the year. The company is already preparing to take advantage of the improving consumer confidence by increasing its capex investment by 67.3%y/y to GHS14.65 million. 

There was an uptick in the cost of raw materials, which may have been due to the slight depreciation of the local currency during the period as FML imports some raw materials. This resulted in a 27.0%y/y decline in gross profit to GHS94.54 million in 9M-2020 from GHS129.46 million in 9M-2019.

The company managed to control its operating expenses in the midst of the pandemic. However, despite the drop in operating expenses by nearly 7%y/y to GHS98.08 million in 9M-2020, the operating expense ratio was elevated to 36.7% in 9M-2020 from 31.9% in 9M-2019, largely due to the contraction in revenue.

Fan Milk’s net earnings deteriorated to a loss of GHS2.40 million in 9M-2020 from a profit of GHS19.24 million in a similar period last year, largely due to the contraction in revenue, higher cost of raw materials and elevation in the operating expense ratio.