Wednesday, January 30, 2019 05:10 PM /NSE With Additional Comments from FBNQuest Research
FMN’s Q3 2019 PBT more than halved to N3.0bn largely due to a -484bps contraction in gross margin to 11.1%. Consequently, PBT missed our forecast by 12%. Nevertheless, FMN’s annualised PBT tracks above consensus 2019E PBT forecast of N11.7bn. Consequently, we expect to see a neutral-to-negative reaction from the market.
Interest expense declined by -40% y/y reflecting the management substitution of long term debt for expensive short term borrowings.
Q3 2018 gross margin contracted by -484bps to 11.1%, primary driven by input cost pressures from foods and agro allied divisions. Further down the P&L, PBT and PAT fell by -51% y/y and -27% y/y respectively.
Year-to-date , FMN shares have underperformed the index. The shares have shed -17.7% compared with the -0.9% return on the ASI.
We rate the stock Neutral. Our estimates are under review.
Flour Mills of Nigeria Q3 2019 (end-Dec) results vs. FBNQuest Capital Research estimates (N millions)
Source: NSE, FBNQuest Capital Research estimates