Fan Milk PLC delivered explosive revenue growth of 50.6% in the first nine months of 2025, but net profit declined slightly as the ice cream and dairy giant grappled with soaring operating costs and a one-time exceptional charge, according to unaudited financial statements filed with the Ghana Stock Exchange.
The company, a subsidiary of Danone and Ghana’s leading frozen dairy producer, reported revenue of GHS 726.6 million for the period ended September 30, up from GHS 482.5 million the previous year. However, net profit edged down 3.7% to GHS 42.4 million from GHS 44 million, while earnings per share slipped to GHS 0.36 from GHS 0.38.
The seemingly contradictory performance tells the story of a business pursuing aggressive growth while navigating intense cost pressures. Gross profit surged 41.8% to GHS 252.8 million, but the company’s gross margin contracted from 36.9% to 34.8%, suggesting that raw material costs for milk, sugar, and packaging increased faster than selling prices could accommodate.
Operating expenses spiraled sharply during the period. Sales and distribution costs jumped 36.8% to GHS 107.8 million, while administrative expenses surged 54.4% to GHS 60 million, both outpacing gross profit growth and squeezing margins. A one-time exceptional item of GHS 6 million further pressured profitability, though the company did not disclose the nature of this charge.
Finance income plummeted 66.6% to GHS 9.4 million from GHS 28.1 million, likely reflecting lower interest rates or reduced cash balances during parts of the period. The bright spot came from finance costs, which fell 64.6% to GHS 3.9 million as the company benefited from reduced debt servicing obligations.
Despite the profit squeeze, Fan Milk’s balance sheet strengthened dramatically. The most striking change was the company’s cash position, which nearly tripled to GHS 198.4 million from GHS 76.5 million at the same point in 2024. This remarkable buildup stemmed from exceptional operating cash flow of GHS 118.6 million, up 22% from the previous year.
The cash surge was powered by much more efficient working capital management. Trade receivables decreased significantly by GHS 71 million, indicating faster collection from customers, while inventory levels also dropped by GHS 7.9 million despite the higher sales volumes. The company generated GHS 140.4 million in cash from operations before tax payments, demonstrating strong underlying business performance.
Total assets grew to GHS 683.2 million from GHS 625.9 million, while equity rose to GHS 305.8 million from GHS 267.3 million, reflecting retained earnings from the profitable period. The company paid higher dividends of GHS 9.3 million compared to GHS 5.8 million the previous year, rewarding shareholders from its strengthened cash position.
The performance comes as Ghana’s dairy sector navigates complex macroeconomic conditions. Inflation in Ghana has been falling steadily, reaching 11.5% in August 2025, down from 12.1% in July, marking the lowest rate in almost four years. However, milk and dairy products still face 14.8% annual inflation, pressuring manufacturers’ input costs.
Danone, Fan Milk’s parent company, has acknowledged that economic barriers such as inflation persist across its African operations, with rising feed costs and currency volatility putting pressure on product costs and consumer prices. The company has been pursuing productivity initiatives to drive efficiency and mitigate inflation’s impact.
Fan Milk’s biomass energy strategy continues to insulate the business from utility cost volatility. By shifting from diesel, gas, and electric boilers to biomass systems, the company has reduced exposure to rising electricity tariffs and fluctuating fuel prices, helping contain production costs despite quarterly utility tariff increases.
Industry analysts noted that Fan Milk’s first quarter 2025 performance suggested a potential recovery in export performance, indicating that prior challenges affecting export sales may have been effectively addressed. The company’s 50% revenue surge far exceeded analyst expectations, with topline and earnings beating estimates by 19.8% and 66.8% respectively in the first quarter.
Capital expenditure remained disciplined during the nine-month period, with the company investing GHS 20 million in property, plant, and equipment, significantly less than the GHS 80.9 million spent the previous year. The absence of major loan repayments in 2025, compared to GHS 55 million in debt service the prior year, further improved cash flow dynamics.
Fan Milk manufactures and markets dairy products and fruit drinks across Ghana and West Africa, producing frozen strawberry yogurts, chocolates, ice cream, snacks, and ice lollies under brand names including FanYogo, FanChoco, FanIce, FanDango, and FanPop. The company operates through a network of independent distributors and agents, with operations in Benin, Togo, and Burkina Faso.
Looking ahead, Fan Milk faces the challenge of translating massive sales growth into more robust bottom-line profitability. With nearly GHS 200 million in cash reserves, the company possesses substantial financial flexibility for strategic investments, debt reduction, or special dividends. However, effectively deploying this capital while controlling spiraling administrative and distribution costs will be critical to sustainable earnings growth.
The company’s ability to maintain margin discipline amid persistent inflationary pressures remains the key question for investors. While the top-line momentum is undeniable, Fan Milk must demonstrate that its growth strategy can generate profitable revenue, not just impressive sales figures.
Source: newsghana.com.gh
