Net profits at Oman Flour Mills (OFM) dropped by 64.5 per cent for the six-month period ended December 31, 2011, as the company awaits feed products subsidy from the government, according to a statement released to the Muscat Securities Market (MSM) on Sunday.
The company is also planning to launch new products this month with its industrial bakery completing successful trial production. OFM reported a net profit of RO1.14mn, down from RO3.21mn in the corresponding period in 2010.
However, OFM expects a post better numbers this year as the loss on feed products in 2011 would be compensated by government subsidy this year.
Manal Mohamed al Abdwani, chairperson of OFM, said in her report that the loss on feed products and diminution in value of investments are the main reasons for the drop in profits.
She said, "The government has approved the subsidy on feed products effective from January 1, 2011. However, we are still awaiting the mechanism of its computation. As a result, the impact of the subsidy has not been accounted for in the financial results."
Manal added, "Construction of the industrial bakery has been completed and trial runs have been successful," with products expected to be launched this month.
The company's sales volume increased by 22 per cent in the six-month period as compared to the same period in 2010. Flour mill operating profit rose 25 per cent from the previous year.
OFM subsidiaries Modern Poultry Farms and Sohar Poultry continue to be profitable and expect more improvements in the coming months with production increasing and mortality rates reducing, according to the report.
The company's total revenues increased by 29 per cent to RO29.62mn compared to RO23mn in the same period last year. Cost of sales increased by 43 per cent to RO26.6mn from RO18.6mn. The profit margin declined to 3.94 per cent from 14.45 per cent last year.
© Muscat Daily 2012
