NIGERIA – Flour Mills of Nigeria Plc has announced a profit before tax of N3.54 billion for the first quarter ended June 30, 2014 showing a decline of 24.5 per cent over N4.69 billion recorded in the corresponding period of 2013.
The results released to the Nigerian Stock Exchange (NSE) showed that its turnover declined to N9.71 billion compared with N10.49 billion in the same period of last year
The PBT declined was due to a combination of factors, which including a 22bp reduction in gross margin to 11.6 per cent, a 76 per cent y/y rise in interest expense to N5.5 billion and a 46 per cent y/y decline in other operating income.
These negatives, analysts stated, completely offset the bright spots in the results, which were the 27 per cent y/y decline in opex to N3.8 billion, 7.0 increase in the share of profits from associates (mainly UNICEM) to N1.3 billion and a 32 per cent y/y growth in investment income to N966 million.
Analysis of the company’s result revealed that its profit after tax also declined by a similar margin to that of PBT, by 24 per cent y/y to N2.6 billion.
Flour Mills had last week assured stakeholders that the company is well positioned to enhance profitability and deliver long term value to shareholders.
This, the company said, is in furtherance to strategic acquisitions it made in its core business areas in 2013.
Managing Director of the company, Paul Gbededo, who disclosed this when he presented the ‘Facts Behind the Figures’ of the company to stock brokers in Lagos, explained that the new investments made by the company last year is near conclusion.
On the back of the N246 billion turnover and profit after tax of N10.47 billion achieved in its last financial year, the company, according to Gbadedo is poised to continue to deliver consistent top and bottom line growth.
He said: “We are commissioning and improving our capacity utilisation. Our new investments and projects are reaching maturity.
We would start production at the 350,000 metric tons per annum edible oil processing company in Ibadan by the end of this year, our snack business is reaching maturity with the completion of Golden snack facility in Agbara, the $250million Golden sugar investment, our oil palm processing , all these investments would start impacting on the bottom line moving forward.”
He explained that its investments in the food and agro- allied business constitutes 95 per cent of the company’s revenue.
Speaking on why the $250million Golden Sugar Company did not generate revenue for the financial year, Gbadedo said: “For such a huge investment, you will not expect to make profit in the first year but we have positioned it for growth. We just commissioned the plant and the first year was difficult, we could not produce enough.”
“Again, we commenced production last year and the sugar that was selling at N9,000 dropped to N5,500 but we are strong enough to stay in that business and we are looking beyond what we have today. We are currently at 48 per cent capacity utilisation and in the years to come, it will add proper value to all shareholders.”
He added that as part of the company’s strategy to align with government backward integration initiative, the company has also acquired 500 hectares of land in Niger state for rice cultivation.