Fan Milk Limited reported a strong revenue growth and improved profitability for the half year ended June 2025, underscoring operational recovery and cost control in a high-inflation environment.
Revenue grew by 58.4% YoY to GH¢506.6 million (H1 2024: GH¢319.8 million), driven by higher product volumes, improved pricing, and stronger brand performance across its dairy and frozen categories. Despite inflationary pressure and higher distribution expenses, profit before tax rose 24.3% YoY to GH¢41.7 million, while net profit increased 6.3% YoY to GH¢26.0 million.
Key Financial Highlights (GH¢ ‘000)
Metric H1 2025 H1 2024 YoY Change
Revenue 506,557 319,845 +58.4%
Gross Profit 167,582 117,591 +42.5%
Operating Profit 36,431 28,388 +28.3%
Finance Income / (Cost) +5,303 +5,199 +2.0%
Profit Before Tax 41,734 33,587 +24.3%
Net Profit 26,046 24,507 +6.3%
EPS (GH¢) 0.22 0.21 +4.8%
Operational Analysis
- Revenue Growth: +58% YoY reflects higher demand for dairy, yoghurt, and frozen snack products, aided by distribution expansion and improved availability following supply chain normalisation.
- Gross Margin: 33.1% (2025) vs. 36.8% (2024). The decline indicates higher input costs (notably milk powder, packaging, and energy) despite revenue growth.
- Operating Expenses:
- Sales & distribution costs rose 39% YoY to GH¢70.8m due to fuel, logistics, and marketing expenses.
- Administrative expenses surged 76% YoY to GH¢46.9m, reflecting wage adjustments and higher overheads.
- Operating Margin: 7.2% (2025) vs. 8.9% (2024), slightly compressed but still healthy for the FMCG sector.
- Finance Costs: Fell 72.7% to GH¢2.6m, aided by lower borrowing and stronger cash generation.
- Tax Expense: Higher at GH¢14.3m (+73%), reflecting stronger earnings and updated Ghanaian tax rules (Growth and Sustainability Levy).
Balance Sheet Highlights
Item H1 2025 FY 2024 Δ YoY
Total Assets 624,446 631,292 -1.1%
Equity 289,484 247,787 +16.8%
Total Liabilities 334,962 383,505 -12.7%
Cash & Cash Equivalents 178,262 60,824 +193%
Interpretation:
- Equity strengthened by 17%, supported by retained earnings.
- Liabilities dropped as the company reduced loans and lease obligations.
- Strong operating cash flows (GH¢90.3m) boosted liquidity, positioning Fan Milk for reinvestment or dividend stability.
Cash Flow Summary
- Net Cash from Operations: GH¢90.3m (vs. GH¢65.0m in 2024)
- Net Investing Outflows: GH¢11.8m (capex and lease payments)
- Financing Outflows: GH¢9.3m (dividend payments)
- Net Increase in Cash: GH¢69.2m → ending cash balance of GH¢178.3m
Comment: Stronger internal cash generation reduces reliance on external financing, a positive sign for capital discipline.
Profitability Ratios Ratio H1 2025 H1 2024
Gross Margin 33.1% 36.8%
Operating Margin 7.2% 8.9%
Net Margin 5.1% 7.7%
ROE (annualised) ~18% ~20%
While profitability margins tightened due to inflation and higher logistics costs, Fan Milk remains solidly profitable, and returns remain attractive for a mid-cap FMCG firm.
Analyst Commentary
“Fan Milk delivered a strong top-line rebound in H1 2025, reaffirming its market leadership in Ghana’s dairy segment. Although rising distribution and administrative costs compressed margins slightly, the company’s strengthened cash position and declining leverage reflect disciplined balance sheet management. Continued focus on efficiency, innovation, and local sourcing will be critical for sustaining profitability into FY2026.”
Outlook
Short-Term: Maintain volume momentum, manage input costs, leverage cash reserves for raw material procurement. Medium-Term: Reinvestment in production capacity and distribution expansion to sustain double-digit growth. Risks: Inflation, FX volatility (Cedi depreciation), and regulatory tax levies could pressure margins.
Conclusion: Fan Milk’s H1 2025 results demonstrate resilience and earnings recovery, supported by strong revenue growth and disciplined financial management. The company’s improved liquidity and balance sheet flexibility position it well for sustained growth in Ghana’s competitive FMCG landscape.
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