Benefits from Investment Sales in UNICEM Help to Improve Flour Mills Bottom-line


Friday, July 22, 2016 9:46am /NSE

I am pleased to report that in spite of the strong economic headwinds and tough business environment, devaluation of the Naira and unrest in the North East, Flour Mills Group had an inspiring year wherein Group Revenue grew by 11% from it’s 2015 figures of N308 billion to reach N342 billion while Group Profit Before Tax increased by 49% from N7.7 billion to N11.5 billion. Group Profit after Tax was N14.4 billion, 71.4% higher than N8.4 billion of 2015 financial year.

The Company, Flour Mills of Nigeria Plc, posted a Revenue of N248 billion, a growth of 8%, over the N230 billion of last year, Impressively, the Company’s Profit Before Tax grew by 589% to N6.2 billion from the N0.9 billion posted last year, whilst Profit After Tax grew by 334% to N10.4 billion from N2.4 billion.

Cost of sales was impacted by higher cost of foreign currency due to foreign market deregulation resulting in closing blended exchange rate of N295 to $1 as against the CBN rate of N197.50. The Company was able to offset the impact of the foregoing on its bottom-line only by gradual increases in selling prices of its products.

The strong improvement in revenue and profitability was primarily driven by volume growth and efficiency gains, while benefits arising from the sale of investment in our associate company – UNICEM helped to improve the bottom-line.

The good news is that management is determined to further restructure our operations, streamline our business operations to focus on core businesses and constantly monitor and manage our costs optimally to hedge against further economic challenges which might evolve. It is also noteworthy that Management is resolute in ensuring that sustainable returns and dividends from the group’s agro allied investments are properly harnessed by maximizing local content in the Groups products, bye-products and processes.

Our confidence in the future prospect of our Company is demonstrated by the fact that despite daunting economic challenges to our business, our directors are proposing to our shareholders at the forthcoming Annual General Meeting, the declaration of a total of N2.62 billion (2015- N5.5 billion) representing Dividend payment of N1.00 (2015 – N2.10) per ordinary share of 50 kobo each subject to Withholding Tax at the appropriate rate. We wish to assure our esteemed shareholders of our commitment to delivering superior shareholder value.

During the year FMN increased its already substantial investment in its Agro Allied businesses where it now grows and processes maize, soy beans, sorghum, sugar cane, palm oil, rice, cassava and poultry and our dominant supply of Fertilizer and Agri Sacks to the Nigerian Market. FMN continues to be one of the major promoters of the Agricultural Transformation Agenda of the Federal Government with its on-going agro-allied investments aimed at creating jobs and stimulating economic activities in urban and rural areas.

FMN’s goal is to be involved in all stages of the food value chain where a profitable and sustainable Agro-Allied platform of cultivating and processing locally produced raw materials will ensure the growth and success of our Food business. We are mindful of the importance for our agricultural operations to be profitable, sustainable and environmentally friendly.

We shall continue to leverage on the unassailable quality of our flagship product, Golden Penny Flour; the growing popularity and market acceptability of our sugar brand; our continuous investment in new milling technology; our major investment in Agro-Allied businesses; development and introduction of new products in response to evolving consumer expectations: and, our strengthened Pan Nigerian products distribution network to generate improved earnings and deliver superior shareholder value.

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