Flour Mills grows profit before tax for Q3 to US$10.2m

NIGERIA – Flour Mills of Nigeria Plc, a diversified Nigerian agribusiness company has reported a 23% increase in profit before tax to N3.7 billion (US$10.2m) in the third quarter for the year 2019/20.

The group’s revenue in Q3 2019/20 was N152.7 billion (US$422.4m), compared to N130.9 billion (US$362.1m) in Q3 2018/19 which was 17 per cent YoY growth.

For the nine months ended 31st December 2019, Group revenue was N423.5 billion (US$1.17b), representing a six per cent increase compared to same period last year, according to the group in a statement

Gross profit increased by 11 per cent in Q3 and by three per cent YTD. YTD gross profit is N47.8 billion (US$132.2m), compared to N46.6 billion (US$128.9m) last year.

Finance cost reduced by 20% to N4.3 billion, a significant drop compared to N5.3 billion (US$14.6m) in Q3 2018/19 (21 per cent – YoY decline).

Profit before tax increased by 23 per cent to N3.7 billion (US$10.2m) in Q3 and by nine per cent to N12.3 billion (US$34m) YTD.

Net cash generated YTD was N7.9 billion (US$21.8m), compared to N7.2 billion (US$19.9m) in the prior year.

A review of Q3 2019/20 results shows impressive performance across key segments of the business. The group recorded remarkable growth in its volumes from six per cent during 1st HY to eight per cent in the period under review.

The agro-allied, sugar and food value chains all had impressive results this quarter, with the food business now moving towards expected projections.

Gains in the sector can be attributed to a combination of ongoing brand loyalty and refined regional strategies that are designed to increase market penetration.

These strategies have been boosted by recent improvements in the domestic market as a result of gains from the boarder closure.

The management’s strategy on increasing the efficiency of its balance sheet and improving working capital continues to yield the desired result, with finance cost recording a steady decline. The group also plans to issue corporate bonds in Q4.

The agribusiness company announced its plan to issue a N20 billion (US$55.16m) medium-term bonds, which is subject to appropriate pricing.

In a statement to the Nigerian Stock Exchange, the maker of Golden Penny spaghetti said that the proposed issuances are expected to be senior unsecured fixed-rate bonds.

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The statement further to disclose that the bonds would have tenors of three years and five years, respectively.

The latest issuance is part of Flour Mill’s previously approved N70 billion (US$193m) issue programme.

The company said it had begun the process of getting the needed approval from the Securities and Exchange Commission so that the issuance could take effect.

Flour Mills intends to use the proceeds from the bond issuance to refinance its existing short-term debt, increase the efficiency of its balance sheet and ultimately increase the wealth of the company’s shareholders.

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