Vitafoam slashes dividend as annual profit slumps 89%
Vitafoam’s board of directors has approved a dividend payment of N1.31 billion, or N1.05 per share, for the year ended 30 September 2024 compared to N1.95 billion (N1.56 per share) in the previous year.
The foam manufacturer saw its profit after tax fall to N952.19 million from N4.37 billion in the prior year, according to its annual report released on Tuesday.
It reported a net realised exchange loss of N13.71 billion “arising majorly from the settlement of due dollar-denominated obligations” and net unrealised exchange gain of N1.021 billion as a result of receivable from Vitafoam Sierra Leone.
Vitafoam buys and imports some of the raw materials used for production, with payments made in US dollars. Receipts for sales of finished goods in Nigeria are in naira while those for sales of finished goods to countries such as Sierra Leone are in dollars, according to the company.
“The group makes payments and collects receipts primarily in Nigerian Naira. Periodically however, receipts and payments are made in other currencies, mostly in the US dollar,” it said. “Management’s approach to managing foreign exchange risk is to hold foreign currency bank accounts which act as a natural hedge for these transactions.”
It said currency exposure arising from assets and liabilities denominated in foreign currencies “is also managed primarily by setting limits on the percentage of net assets that may be invested in such deposits”.
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Expansion bearing fruit
Vitafoam, along with its subsidiaries Vitapur Nigeria, Vitablom Nigeria, Vitavisco Nigeria and Vitafoam Sierra Leone, specialises in the manufacture, marketing, and distribution of flexible and rigid foam, fibre and textile-based products in Nigeria and other West African countries. Two other subsidiaries Vono Furniture Products and Vitaparts Nigeria produce furniture and spin-on as well as catridge vehicle oil filters.
The group said its expansion into Sierra Leone “is already showing positive results, with successful market penetration and growing acceptance of its products”.
The factory in Sierra Leone is producing products for sale locally and exporting to Guinea and Liberia as part of its broader market expansion strategy.
“Vitafoam is also strengthening its collaboration with stakeholders in Sierra Leone, including humanitarian agencies, to support the mass production and distribution of quality mattresses across the country. This expansion will enhance Vitafoam’s market reach and contribute to improving living standards in the region,” it said.
