FMN comes in strong @N772bn
● Agro-allied segment rakes in N139.4bn revenue despite CBN’s FX restrictions on wheat importation
Flour Mills, just like its close competitor, Honeywell Flour Mill, has reported stellar performance with an impressive 34.5 percent year on year increase in revenue to...
Flour Mills, just like its close competitor, Honeywell Flour Mill, has reported stellar performance with an impressive 34.5 percent year on year increase in revenue to N771.6bn in 2021 from N573.8bn in 2020, driven by robust growth across all the segments, as contained in the company’s full year audited financial statement filed to the Nigerian Exchange and seen by Business A.M.
The robust numbers this year follow on the back of the pandemic in 2020 which came with movement restrictions that led to some changes in consumer behaviour whereby they invested more in foods with longer shelf life during the lockdowns; thereby boosting the demand for pasta, noodles, and wheat meal.
An analysis of the reports shows that Flour Mills recorded an all-around performance from all the segments with minimum revenue growth of 27 percent year on year. The support segment revenue grew the most at 136.9 percent year on year, driven by the increase in volumes. In the food segment, the company recorded a 33.5 percent year-on-year growth to N478.3bn. The agro-allied segment witnessed a 32.2 percent revenue growth to N139.4bn, primarily driven by higher volumes and strategic allocation.
In the sugar segment, total sugar revenue grew by 27.7 percent year on year to N124.6 billion, driven by volume growth and focus on profitable categories. The agro-allied and support segments turned profitable in FY21 after recording losses in FY20, while the food and sugar value chain reported profit before tax growth of 20 percent, year on year, and 8.6 percent year on year, respectively.
The rise in finance income to N3.7bn was due to increased interest income; and decreased net finance costs (N15.0bn) by 6.6 percent year on year further pushed the net profit higher to N25.72bn from N11.4bn as the group further optimised financing and debt levels. Additionally, the company wrote back N2.1bn, further magnifying the bottom line. The company recorded a net profit of N25.7bn in the fiscal year 2021, as against N11.4 billion a year back, resulting in a massive 126 per cent yearon-year growth.
The significant jump in profit after tax can be attributed to continued bottomline expansion in the agro-allied segment that reported profit before tax of N9.9bn in FY2021 as against a loss of N1.7bn, twelve months ago. Net margin expanded by 1.4 percentage points to 3.3 percent in 2021. The company reported earnings per share of N6.38 from N2.55 in the full year 2020.
As the cost of sales grew only 30.9 percent year on year, it expanded gross margin by 2.4 percentage points year on year to 13.8 percent in FY2021. Flour Mills’ admin expenses soared high as its selling & distribution and administrative expenses rose by a significant 30.2 percent and 24.4 percent to N12.1bn and N29.0bn in 2021, respectively. This resulted in a marginal expansion of the company’s operating margin by 0.7 percentage points year on year as the robust operating performance was offset by a significant jump in costs and net operating losses of N15.5bn, against the operating gain of N4.9bn in FY20. The primary contributor to the net operating loss was the loss on exchange difference of N12.2bn, compared to N3.6nn in the prior year.
It is worth noting that flour millers in Nigeria are turning to unauthorized traders for dollars to purchase wheat after the central bank restricted using dollars to import the grain. Though Nigeria lacks the capacity to produce wheat, harvesting just one percent of the 4.7 million tonnes of the grain it will consume this year.