Flour Mills Of Nigeria Sales Revenue Up 51%, Hits N1.16tr, But Profit Limps 9% Up

Flour Mills of Nigeria Plc, on Monday showed its prowess as a major food basket of the nation, after earning N1.163tr for the full-year ended March 31, 2022, up by 51% from the previous N771.607bn, more than double the N542.67bn the group reported in 2018, five years ago. The bulk the revenue, however, went into cost of sales given its heavy reliance on importation of the bulk of its raw materials in foreign exchange at a time the value of the Nigerian Naira is at its low. Profit after tax was, however, not as impressive, after limping by a mere 9% from N25.716bn to N28.015bn in the period under review, on the back of a significant 2,186% growth in minimum tax for the period from N91.216m in the corresponding period of 2021, to N1.902bn.

The directors, notwithstanding, grew dividend payout by 30% from N6.765bn to N8.815bn, representing a dividend per share of N2.15, compared to N1.65 in the preceding full-year; from earnings per share of N6.26, a slight drop from N6.38 each.

According to the result presented through the portal of the Nigerian Exchange Limited, cost of sales stood at N1.055tr, from N664.85bn; leaving a gross profit of N108.09bn, a marginal increase from N106.757bn in the prior full-year.

Net operating losses dropped from N15.528bn to N135.885m; after fees earned leaped from N1.285bn to N4.36bn; fair value gain on derivatives stood at N389.42m from a loss of N1.773bn; insurance claim grew to N743.832m from N72.148m; and sundry loss fell to N127.578m from N2.783bn; as well as the nil write-off/impairment of PPE, compared to previous year’s N4.641bn; while loss on exchange difference dropped to N10.194bn from N12.222bn; among others.

Write-back of impairment on trade and intercompany receivables fell from N2.093bn to N415.208m; even as selling and distribution expenses dropped to N11.08bn from N12.079bn, boosted by selling expenses which fell from N5.025bn to N4.777bn’ and employee cost of N4.458bn, against the previous N3.971bn. Administrative expenses rose to N31.775bn from N29.045bn, with employee costs accounting for N11.577bn, compared to N9.112bn; followed by the growth in depreciation from N2.463bn to N3.144bn; just as bank charges stood at N2.56bn from N1.361bn; and legal and professional fees from N1.41bn to N2.471bn. These resulted in operating profit of N65.513bn from N52.196bn.

Investment income fell from N3.652bn to N1.086bn; finance costs rose from N18.655bn to N25.481bn, the lion’s share of which was the N17.958bn interest on bank loans and overdrafts, which rose from N9.885bn; while interest on bond and commercial papers dropped from N7.488bn to N5.98bn. Profit before minimum tax, therefore stood at N41.118bn, compared to the previous N37.193bn. Profit before tax inched from N37.284bn to N39.215bn; as net income tax expenses dropped marginally to N11.2bn from N11.567bn.

An analysis of the financials showed that Flour Mills of Nigeria earned N1.118tr from sale of goods and N45.643bn from support services rendered within the period, compared to N742.409bn and N29.198bn in the prior full-year. A further breakdown showed that the group’s food segment contributed N748.762bn, N270.431bn, or 56.53% increase over the N478.331bn reported in the corresponding period of 2021; while agro-allied (sale of Golden Penny Vegetable oil, soya oil and margarine products) contributed N213.373bn, up from N139.439bn; and sugar, N156.022bn against the N124.638bn in the 2021 full-year.

Cost of sales was driven by cost of raw and packaging materials, which soared by N374.338bn or 64.14% from N583.617bn to N957.956bn; followed by production employee cost of N23.522bn from N20.369bn; while fuel and oil cost gulped N23.111bn from N17.806bn; depreciation cost dropped marginally from N21.605bn to N21.447bn; and factory repairs and maintenance rose from N11.799bn to N16.113bn; among others.

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