NIGERIA – But for the N23.7 billion gain realised from the sale of its remaining 15 per cent stake in United Cement Company of Nigeria (UCC) Limited, Flour Mills of Nigeria (FMN) Plc would have ended its nine months results period ended December 31, 2015 with a loss of about N3.9 billion.
However, the company ended the period with a profit after tax of N19 billion, compared with N3.3 billion profit in the corresponding period of 2014.
The unaudited report made available by the Nigerian Stock Exchange (NSE) on Wednesday showed that FMN’s operations was negatively impacted by the challenging operating environment.
Revenue grew by 8.2 per cent from N244 billion in 2014 to N264 billion in 2015.Cost of sale rose by 7.8 per cent from N219 billion to N236 billion, while marketing, distribution and administrative expenses soared by 43 per cent to N15.2 billion, from N10.6 billion. Similarly, net finance cost jumped by 38 per cent from N11.9 billion to N16.4 billion.
The company made a profit of N23.7 billion from its remaining investment in UCCN. Consequently, it ended the nine months with a profit of N19 billion.
According to FMN, despite the pressure on top line sales, coupled with operational and logistics issues in Apapa, the group and company succeeded in growing revenues by eight per cent year-on-year.
The improved top line growth was impacted by devaluation of the Naira which led to rising input costs. In addition, the decline in profit before tax was partly driven by higher financing costs.
It is pleasing to note that a gain of N23.7 billion realized on sale of the remaining 15 per cent of the group’s investment in UCCN was a big boost to the group’s bottom line.”
However, commenting on the third quarter(September-December 2015) performance, FBN Capital said FMN recorded pre-tax and after tax losses of N4.3 billion and N5.2 billion respectively.
“The losses compare with pre-tax and after tax losses of N2.1billion and N1.3 billion in Q2. Although sales grew by nine per cent year-on-year(y/y) to N86.1 billion, gross margin expanded by 153bps y/y to 11 per cent and operating expenses (opex) declined by 16 per cent y/y to-N4.3 billion, a 1,054 per cent y/y rise in other losses and interest expense of N5.1 billion proved more significant and were the key drivers of the losses,” the firm said.