Flour Mills of Nigeria Plc posted a N28 billion profit for the year ended 31st of March 2022 following a rise in the revenue of the company by 51%, from N772 billion to N1.16 trillion.
The result was amid an inflationary year which saw the prices of goods and services increase significantly.
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In addition to increasing prices, the Russia-Ukraine war set off a chain reaction in the global economy causing a spike in important commodities such as wheat. In spite of these, the company witnessed an increase in revenue, underlying the importance of food as a necessity.
The report shows that the cost of sales increased with the revenue during the period by 59% to hit N1.1 trillion from N665 billion resulting in a gross profit of N108 billion; closing in on N106 billion in the previous year.
While the company saw a net operating loss of N135 million during the period, the amount is quite small compared to N15 billion loss for the same purpose in the previous year.
Also, selling and distribution expenses, as well as administrative expenses, amounted to N11 billion and N31 billion from a respective N12 billion and N29 billion. These influenced the operating profit to record N66 billion in 2022 compared to the N52 billion in 2021.
Investment income – basically from short term investments and bank deposits – saw a drastic dip by 70% to post N1.1 billion in 2022; as of the year before, the amount realised for the same purpose was N3.6 billion.
Finance costs, however, saw an increase to N25 billion from N18 billion as a result of the increase in interest on bonds and commercial paper, interest expenses on lease liabilities and interest on bank loans and overdrafts.
The profit before tax however stood at N41 billion in 2022 from N37 billion in 2021 while profit was N28 billion in 2022 from N26 billion in 2021
Recall that FMN recently announced that it has obtained all the necessary regulatory approvals to acquire a 71.69% stake in Honeywell Flour Mills (HFMP) and another 5.06% stake in HFMP held by First Bank.
According to the company, the acquisition has been approved by all relevant regulators, namely the Federal Competition and Consumer Protection Commission (FCCPC), Nigerian Exchange Limited (NGX), and the Securities and Exchange Commission of Nigeria (SEC).
Shareholders pocket N8.8bn dividend for 2022
Following the result, FMN Plc proposed a total dividend of N8.8 billion for the 2022 financial year against N6.8 billion recorded in 2021.
The dividend represents N2.15 per share, a 30% growth over last year (compared to an 18% growth in FY’21 and a 17% growth in FY’20).
They made the disclosure at the analyst/investor call conference to review its full-year 2022 results.
According to the company, “Flour Mills of Nigeria Plc in FY’22 demonstrated solid performance across Food, Agro-Allied and Support Segments delivering topline growth of 57% in Q4 and 51% in FY22, behind strong volume growth and favourable mix.
“Significant increase in international food prices and input costs impact gross margin. Wheat and sugar costs increased by over 30% and 20% respectively in addition to higher energy and local distribution costs whilst sustaining progress on ESG agenda
“Persistent operating performance in the Food segment; impressive improvement in the Agro-Allied and Support segments following continuous expansion, product innovation and enhanced capacity resulted in an impressive Profit Before Tax (FY’22 Vs FY’21: N41bn Vs 37bn) – up by 11%.
“Agro-Allied business segment contributed 47% (N19bn) to the group’s Profit Before Tax following increase in local demand and increased export operations.
“Flour Mills of Nigeria Plc obtained approval and has acquired Honeywell Flour Mills Plc to reinforce its position as the leader in flour, semolina and pasta market”.
The group noted that its oil and fats business grew revenue by 58%, while pretax profit margin expanded by 141% y-o-y driven by improved export operations (revenue up 26%), implementation of cost savings programme and installation of a seed cleaning plant to reduce frequent machine breakdown in production.
Animal feeds business recorded 49% growth largely due to product innovation and investments in logistics infrastructure while the fertilizer business expanded with a new blending plant in Kaduna State, contributing 89% and 21% growth in revenue and volume respectively.
Honeywell operating under FMN from May 2022
Also, recall that Flour Mills of Nigeria Plc through its affiliates acquired 71.69% equity stake in Honeywell Flour Mills Plc in the year under review.
In addition, FMN through its affiliates also acquired 5.06% equity stake of FBN Holding’s in HFMP
The management further disclosed that FMN is now the majority shareholder with 76.75% equity stake with operational and managerial control.
The transaction was valued at a total estimated enterprise value of N80bn. It was concluded at final equity price per share of N4.20.