The closure of NGIP Agmark Limited hardware business contributed to the company’s drop in profit.
NGIP Agmark chairman Donald Manoa stated in the company’s 2015 Annual Report that the decision to close its hardware business was because of competition.
“The year 2015 marked a challenging time for our business. We have been forced to face some hard truths about our organisation and about the Papua New Guinea economic situation.
“Most significantly, we reached the conclusion that our strategy of aiming to be a large scale retail hardware player nationally, was simply not sustainable given the increase in competition and proliferation of new hardware stores in PNG and so took the decision to close that division.
“Excessive obsolete stock holdings and embedded theft were also factors in the decision. The closure triggered a need to write off large volumes of excess stock that had accumulated and this was the major driver of our net loss of K15.3 million.
“The revenue reduction from K244.5 million down to K234.2M (-4.4%) was nearly all driven by hardware sales reductions and a poor result in coffee (which dropped 44% of its revenue due to a weaker season, particularly in Goroka),” Manoa said.
But the company’s core business of cocoa exports continues to pour in much needed capital to NGIP Agmark.
“Our cocoa division remains a profitable and cash positive driver of our business,” Manoa said.
“Our decision to exit hardware is not only about the weakness in PNG retail, but just as much by our belief in the opportunity and importance of the agricultural sector and the role we should be playing in this sector.