Aug 03 2012
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Oman Flour Mills gets a boost on subsidy, net profit up 45%
In the company's MSM statement, OFM included an undisclosed feed subsidy amount for the 18-month period from January 1, 2011, to June 30, 2012, based on the management's understanding of the methodology to be followed - which means that the company's financials are subject to change.
The government has appointed PricewaterhouseCoopers to audit the feed subsidy computations, but the company has yet to commence the audit.
Analysts estimate that OFM accounted for between RO4.5-5mn of government subsidy on feed and they believe the revenue from its new industrial bakery operations also helped boost profit margins.
He said, "Profit before tax has been positively impacted by the same amount. As a result of the subsidy, gross margin jumped to 20 per cent from 16.2 per cent last year.
"We are positive about the 20 per cent revenue growth the company has witnessed over the last year and assume there have been positive contributions from the recently launched bakery products division, especially in the last quarter. With the second phase of the industrial bakery division starting production in the first quarter of 2013, we expect some positive revenue contributions from this division next year."
Sameer Kattiparambil, associate vice president of research at EFG Hermes, said that OFM is likely to get a subsidy boost - in the range of RO4.5-4.7mn - from the government.
He said, "OFM's net profit in the last quarter went up sharply due to the computation of feed subsidy. Sales revenue also rose due to increased volumes as the company started operations at its new industrial bakery this year.
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