NIGERIA – Dangote Flour Mills Plc (DFM) has demonstrated a high level of corporate governance that drives confidence and supports numbers, as contained in its recent financials for the nine-month ended September 30, 2017 released to the investing public.

The release was, among other reasons, to allow investors plan their investment and forecast the company’s performance.

The scorecard revealed the company’s commitment, aggressiveness and sustaining profitability that had reflected in its outstanding numbers that continues to support price.

Also, the single-mindedness of the company’s management in creating value for its stakeholders at all levels of operations continues to drive profitability.

From a modest start as a division of Dangote Industries Limited in 1999, DFM was incorporated and commenced operations as a public limited liability company on January 1, 2006. It was listed on the NSE in 2008.

It sustained considerable growth and regular dividend payment over the years until 2012 when Dangote Industries Limited (DIL) sold the majority equity stake to Tiger Brands Limited, South Africa’s largest food company.

However, barely two years after the acquisition, Tiger Brands in 2014 wrote off about half of its investment in the former DFM.

Tiger Brands impaired DFM’s value by 849 million rand, about $82 million, because of what it described as “underperformance” and “excess milling capacity that continues to increase in the Nigerian flour market.”

After nearly four years of successive losses and impairing of assets and with losses and frustrations building up on all sides, Tiger Brands, which had just then renamed DFM as TBCG, in November 2015 announced that it would no longer extend funding to the struggling Nigerian subsidiary.

In December 2015, Dangote Industries Limited repurchased the majority equity stake in its erstwhile subsidiary, Dangote Flour Mills Plc.

Few months after the re-acquisition, Dangote Flour Mills returned to profitability in its half year result of 2016, posting a profit before tax (PBT) of N2.64 billion, compared to a loss of N9.55 billion posted in the corresponding period of 2015.

The company has, since then, continued to grow its profit quarterly. For the third quarter ended September 30, 2017, the board of Dangote Flour Mills Plc, reported a growth of 359.35 per cent in its profit after tax.

According to the result, turnover and profit recorded three-digit growth, despite an equally significant increase in cost of sales and administrative expenses, just as foreign exchange gain was double that of preceding third-quarter.

In a company’s result showed profit after tax increased by 359.35 per cent from N2.84 billion to N13.05 billion, translating to Earnings Per Share of N2.55.

Revenue from sales for the period grew by 101.16 per cent to N100.28 billion from N49.85 billion, cost of sales gulped all of N77.03 billion, a rise from N35.82 billion, leaving gross profit of N23.2 billion, up from N14.03 billion.

Other incomje streams also soared from N68.23 million to N3.05 billion, distribution and administrative expenses stood at N10.97 billion, up from N5.63 billion; operating profit before foreign exchange gain rose from N8.46 billion to N15.32 billion, while gain on sale of assets held for sale, stood at N3.74 billion.

Underlying fundamentals indicated considerable improvements in the intrinsic business strengths of the group.

Operating profit increased from N4.71 billion to N19.07 billion while finance costs rose slightly to N2. 56 billion in the third quarter of 2017, as against the previous N2.294 billion. Interest income soared from N228.8 million to N1.50 billion.

The company reported cumulative profit of N307.038 million, a significant improvement from the loss of N20.18 billion in the third quarter of last year.

Dangote Flour recorded gain that rose to 49.37 per cent to close at N9.53 per share to be the best performing stock in the month of October, 2017.

The executive director, Sales and Marketing, Halima Dangote attributed success recorded by Dangote Flour Mills to change in leadership and product innovation.

She highlighted strategic and bold moves by the company to grow its market equity in Africa by re-launching a new and improved pasta product, ‘Ecccellente’ with a great taste and in new pack.

She said, “The new improved and affordable pasta, is expected to reduce the dependency on rice consumption by Nigerians.”

Also, chairman, Dangote Flour Mills, Mr. Asue Ighodalo, said the latest earnings report underscored that DFM is stronger, better sophisticated and more focused.

According to him, since the takeover, the new board and management have taken several steps to reposition the company through expansion to drive growth while continuously focused on increasing shareholders value and offerings to customers.

He reiterated the commitments of the group to further invest in the growth of its businesses within and outside Nigeria noting that the Dangote Group believes in job and wealth creation.

Group chief executive officer, Dangote Flour Mills, Thabo Mabe said the return to profitability was due to several strategies adopted by the company to increase market share and create value for shareholders.

He added that the flour-milling group is driven by the vision to put its products on the table of every Nigerian.