Amidst Slow Turnover Growth, Dangote Flour Nets N15.129bn

After years of posting losses, the management of Dangote Flour Mills, at the weekend showed that the company is finally out of the woods, after wiping off its cumulative losses. This followed the 43.14% growth in net profit, despite a slower 18.6% rise in sales revenue for the period, helped in part by the 375.4% rise in finance income.
Also, the net profit was in spite of the three-digit rise in tax expense for the period, with the directors proposing a humble 20 kobo dividend from the N2.91 Earnings Per Share to relaunch its re-entry into the list of dividends paying companies on the Nigerian Stock Exchange.
According to the result, Dangote Flour Mills recorded a turnover of N125.444bn, up from N105.765bn in the 15 months ended December 31, 2016; with sale of flour recording N108.086bn, up from N81.69bn; followed by N16.607bn from spaghetti, macaroni and other pasta products, up from N15.672bn; while revenue from noodles dropped to N1.024bn, down 87.81% from the N8.402bn reported in 2016.
Cost of sales rose faster at 25.6% from N76.417bn to N96.011bn; resulting in a gross profit of N29.433bn, as against the previous N29.347bn.
Other income dropped to N1.151bn from N1.382bn; distribution and administrative expense however climbed to N12.058bn from N11.804bn, the bulk of which was the N3.192bn employee costs, from N2.111bn; followed by the N3.044bn distribution expenses that fell from N4.793bn. This led to operating profit before impairment and foreign exchange loss of N18.526bn, as against the N18.925bn of prior year.
Impairment of property, plant and equipment and investment of Dangote Flour Mills was nil, compared to N1.05bn in 2016; just as a one-off gain on sale of assets held for sale stood at N3.656bn. The company staved off foreign exchange losses from N3.94bn in 2016; while profit before interest and tax therefore rose to N22.091bn from N16.035bn.

Huge Interest Income
Finance income, being interest income on bank deposits rose to N3.188bn from just N670.662m; finance cost fell by 41.8% to N2.84bn, from N4.887bn, with interest on letters of credit gulping N2.071bn, as against the previous N1.581bn. Profit before tax jumped 89.86% to N22.439bn, as against the previous N11.818bn. Despite the 485% rise in tax expenses from N1.249bn in 2016 to N7.31bn, profit after tax rose from N10.569bn to N15.129bn, with N12.557bn coming from the flour segment; followed by N5.258bn from noodles and N3.846bn from pasta, while inter-group recorded a N6.533bn loss.