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 shortages 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 that will air tomorrow.

“The electricity problems we have had has 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 revenue and profit last year caused by power and water shortages, declining consumer confidence and higher raw material costs, Jeppesen said. Inflation soared to 14 percent in February, the nation’s statistic agency said this week.

“We are trying to maintain prices for as along 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.