Flour Mills of Nigeria posts N33.2bn gross profit in Q1’22

Flour Mills of Nigeria (FMN) has posted a gross profit of N33.2 billion in the first quarter of 2022 (Q1’22), up from N25.7 billion recorded in Q1 2021.

In its unaudited financial statements for the first quarter, 2022 released on Friday, the Group recorded topline growth of 45 per cent in Q1’22 over Q1’21, which showed solid performance across all segments (food, agro-allied, sugar, and support segments), supported by volume growth and a favourable mix.

According to the Group’s financials, other factors that contributed to its solid performance include increased penetration into new and rural markets, for example, the growth of breakfast cereals in the Eastern states and Abuja, and the implementation of innovative marketing strategies to serve the rural markets.

Others are continued focus on investments in route to consumer redistribution resulting in 8,000 new outlets in Q1’22; launch of new SKUs in the starch and fertiliser business segments and commenced operation of fertiliser blending plant in Kaduna with a 90 tons per hour capacity.

The Group also completed the acquisition of Honeywell Flour Mills plc (HFMP) in May 2022 in a transitional process that resulted in a N-1.1 billion deficit for HFMP and N0.4 billion one-off transactional cost for FMN.

It said earnings before tax growth net of transitional costs would have been 15 per cent compared to the previous year.

With regards to the acquisition, the Group said it “is very comfortable with the Honeywell investment, and the long-term projections are very positive after having managed the operations since the middle of May,” it said, adding that the Group “remained committed to maintaining growth and sustaining profitability by increasing local content with further backward integration investments.”

While reviewing its operations, the Group noted that the quarter recorded, “consistently good operating performance (despite an increase in input prices) in the food segment and continued solid performance in the agro-allied segment following continuous penetration into new and rural markets.

“Investment in route to customer redistribution and improved customer interface engagement resulted in N7.3 billion Profit Before Tax up by one per cent on an absolute basis and 15 per cent on an operational basis when excluding the transitional costs.

“Our sugar segment saw a 64 per cent revenue with stabilised trading environments and strong demand for brown sugar which is locally produced at our farm in Sunti. Our animal feeds business attained 21per cent revenue growth, driven by investments in logistics infrastructure and farmer training extension services across the country.”

In his comments regarding the result, the Group Managing Director, Omoboyede Olusanya, said, “Despite the challenging socio-economic environment, we continue to deliver strong business performance with resilience and operational excellence.

“Our increased operational efficiency with accelerated plans for our supply chain optimisation, content localisation, and cost optimisation across our business segments has helped to cushion the sharp rise in the cost of raw materials. We would always be committed to our purpose of feeding the nation, every day through our offerings of quality products and services.

“The Group is dedicated to achieving sector strategic growth opportunities, both organic and inorganic, with keen determination as we continue to create value for our shareholders.”

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