Table of Contents
Key Points
- Vitafoam’s revenue surged 56% in 2024, driven by increased sales of core foam products, reflecting resilient demand despite economic challenges.
- Profit plummeted by 89%, as rising finance costs and a N12.7 billion forex loss from the naira’s devaluation took a heavy toll.
- Vitafoam’s Sierra Leone factory supports its ECOWAS expansion, with growing market acceptance in Guinea and Liberia.
Vitafoam Nigeria Plc, a leading manufacturer of rigid and flexible foam products, reported mixed financial results for its fiscal year ended September 30, 2024, as the naira's devaluation eroded profits despite robust revenue growth.
The company, partly owned by Nigerian polyurethane magnate Samuel Bolarinde, struggled with rising finance costs and foreign exchange losses, underscoring the challenges faced by industrial firms operating in Nigeria's volatile economic environment.
Revenue soars, but profit nosedives
Vitafoam’s revenue surged 56 percent, climbing from N52.9 billion ($34.3 million) in 2023 to N82.64 billion ($53.6 million) in 2024. This growth was primarily driven by increased sales of its core products, including mattresses, pillows, and other foam products, reflecting resilient demand despite macroeconomic headwinds.
However, the company’s profit plunged by 89 percent, falling from N4.37 billion ($2.83 million) to N952.19 million ($618,000). This sharp decline was attributed to surging finance costs, which reached N7.13 billion, and a staggering foreign exchange loss of N12.7 billion ($8.2 million), stemming from the naira’s devaluation.
Despite the significant profit slump, Vitafoam’s board of directors has recommended a dividend of N1.375 billion ($895,000), equivalent to N1.05 ($0.00068) per share, for approval at the company’s upcoming Annual General Meeting.
Regional expansion strategy shows promise
Vitafoam has made strides in its expansion into the Economic Community of West African States (ECOWAS) region, particularly Sierra Leone, where its operations have gained traction.
The Sierra Leone factory, which produces high-quality foam products for local consumption and exports to Guinea and Liberia, has reported successful market penetration and growing acceptance. This aligns with Vitafoam’s broader strategy to enhance its market reach and improve living standards in the region.
While the company’s earnings faltered, total assets increased marginally, rising from N49.66 billion ($32.2 million) to N51.35 billion ($33.3 million). Retained earnings, however, dropped from N15.43 billion ($10 million) to N14.07 billion ($9.12 million), reflecting the toll of the naira’s devaluation and high finance costs.
Leadership and ownership
Vitafoam continues to dominate Nigeria’s foam manufacturing sector, leveraging a vast distribution network across West Africa. Samuel Bolarinde, who owns a 12.03% stake in the company, has been instrumental in its strategic direction.
The Nigerian industrialist, known for his board roles at companies like Wema Bank Plc and Nigerian Breweries Plc, has positioned Vitafoam as a leader in the region's foam market.
The financial impact of the naira's devaluation poses significant challenges for Vitafoam, but its regional expansion strategy and strong revenue growth provide a foundation for future resilience. The company’s ability to navigate currency volatility and leverage its ECOWAS operations will be critical to sustaining shareholder value in the years ahead.
