Business News of 2014-03-17

Fan Milk cuts Ghana investment plan on electricity interruptions

Fan Milk Ltd, the dairy producer owned by private-equity firm Abraaj Group and Danone SA, said it will cut investment in Ghana because of electricity outage plaguing storage and distribution.

The nation’s largest dairy producer will spend about 15 million cedis ($5.8 million) this year, lower than planned, Managing Director Jesper Bjorn Jeppesen said in an interview with Bloomberg TV Africa.

“The electricity problems we have had taken its toll on our agents,” he said. “They have not been able to have adequate power and therefore have not been able to store adequate number of products.”

Fan Milk doesn’t plan to raise prices to make up for a slump in its revenue and profit, Jeppesen said.

“We are trying to maintain prices for as long as possible,” he said.

Net income dropped 21 percent last year to 21.4 million cedis and revenue fell 5.7 percent to 147.2 million, Fan Milk said on Jan. 31. The shares have risen 12 percent this year and were unchanged at 7.42 cedis 1:44 p.m. in Ghana’s capital, Accra.

Danone, the world’s biggest yogurt maker, agreed to buy a 49 percent stake in the Accra-based company in October. Abraaj, the largest private-equity firm in the Middle East, which originally agreed to buy all of Fan Milk, will take a 51 percent stake in the company. Danone agreed to acquire a controlling stake in coming years.

Source: Bloomberg
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