• Login
  • Register
Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
Nairametrics
No Result
View All Result
Home Opinions Blurb

Flour Mills high debt ratios could dent future profits

Nairametrics by Nairametrics
July 23, 2015
in Blurb
Deal: Flourmills Plc Acquired Thai Farms and Rom Oil Mills Ltd
Share on FacebookShare on TwitterShare on Linkedin

The huge debt in the capital structure of Flour Mills Nigeria Plc could crimp the growth of future earnings.

The consumer goods giant had borrowed money to fund its expansion programme with a view to increasing market share.

Total debt in the balance sheet of the company was N169.20 billion in the latest period (March 2015), which represents an increase 35.30 percent from N125.05 billion the previous year.

RelatedStories

Industry powerhouse: Nigeria’s top manufacturing leaders

Industry powerhouse: Nigeria’s top manufacturing leaders

September 17, 2023
Flour Mills of Nigeria Plc

What we learnt from Flour Mills Plc earnings call

July 10, 2018

The company’s balance sheets or operations are unfunded with lenders money as debt to equity ratio was as high as 193.57 percent, an increase from 150.20 percent recorded last year.

This means the company used N1.93 in debt for every N1 of equity. This signals a high gearing position.

The risk associated with high debt-to-equity ratio is the inability of the company in generating enough cash to satisfy its debt obligations.

Also, a 16.10 percent increase in Interest charges portends potential negative effects on Flour Mills profitability in the next few years.

The latest earnings report showed the company recorded a 57.80 percent increase in net income thanks to a N14.28 billion gain from the sale of investments in its subsidiary and tax savings.

Without the gains made on such disposals Flour Mills would have recorded a loss of N5.67 billion because the interest expense of N18.15 billion would have swallowed up operating income of N10.21 billion.

So the high debt ratio is not helping Flour Mills of Nigeria to support future growth.

The devaluation of the naira exposes the company to currency risk as the dollar denominated debt in its capital structure could spiral up.

Flour Mills Nigeria, being a capital intensive business, spent N56.48 billion in the purchase of property plant and equipment in the period.

Financial Highlight 

  • Sales reduced by 5.23 percent to N308.23 billion in the year ended March 2015, from N325.80 billion last year.
  • Operating profits were down by 47.28 percent to N10.21 billion in 2015 compared with N19.37 billion in 2014.
  • Cost of sales fell by 5.23 percent to N273.38 billion in 2015 as against N288.48 billion as at March 2014.
  • Profit before tax dropped by 6.08 percent to N7.72 billion in 2015 as against N8.22 billion last year.
Tags: Flourmills Nigeria
Nairametrics

Nairametrics

Nairametrics is Nigeria's top business news and financial analysis website. We focus on providing resources that help small businesses and retail investors make better investing decisions. Nairametrics is updated daily by a team of professionals. Post updated as "Nairametrics" are published by our Editorial Board.

Related Posts

Industry powerhouse: Nigeria’s top manufacturing leaders
Exclusives

Industry powerhouse: Nigeria’s top manufacturing leaders

September 17, 2023
Flour Mills of Nigeria Plc
Blurb

What we learnt from Flour Mills Plc earnings call

July 10, 2018
Flour Mills Nigeria, FMN, Merger, Fertilizer
Blurb

Flourmills stock; Why it’s worth N38 (42% gain from current price)

January 26, 2018
company-news
Company News

Corporate News roundup for the week ended December 16, 2017

December 18, 2017
company-news
Company News

Corporate News roundup for the week ended November 4, 2017

November 6, 2017
Flour Mills Nigeria, FMN, Merger, Fertilizer
Company News

Flour Mills increases shareholding in Rom Oil Mills to 95%         

July 23, 2017
Next Post
Find Out Why PMB Has Three Banks Under His Microscopic Watch

Find Out Why PMB Has Three Banks Under His Microscopic Watch

Comments 2

  1. Anonymous says:
    July 23, 2015 at 8:23 am

    In as much as i agree with the fact that this high debt ratio will slow down future profit, don’t you think the money made from sales of one of its subsidiary can be used to offset some of these debt. You should also remember that they are about to raise 40billion naira via rights issue which i belief they already have investors ready to commit funds to. I belief if they can use part of these exceptional items to settle part of the debt we may experience a new flourmills.

    Reply
  2. Anonymous says:
    July 30, 2015 at 7:06 pm

    The sale of a subsidiary is one off event that does not occur at all times. Are we saying FlourMills will keep selling subsidiaries to offset debt. On the proposed right issue slated for 2016 as the the company had said in one of its press release, what if the issue is under subscribed?

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Emple
nlng
first bank
Zenth Bank








DUNS

Recent News

  • Cybercrime: Lagos Court orders deportation of 4 Filipinos over Internet Fraud in Lagos 
  • Nigeria’s Justice System is Ruining Investment Confidence – Johnson Chukwu Shares His Story On Talknomics
  • Single-Digit Inflation, Tier 3 Banks, and Why You Can’t Fight African Governments – Drinks & Mics

Follow us on social media:

Recent News

FCT High Court, Benjamin Joseph, zinox

Cybercrime: Lagos Court orders deportation of 4 Filipinos over Internet Fraud in Lagos 

June 14, 2025
Nigeria’s Justice System is Ruining Investment Confidence – Johnson Chukwu Shares His Story On Talknomics

Nigeria’s Justice System is Ruining Investment Confidence – Johnson Chukwu Shares His Story On Talknomics

June 14, 2025
  • iOS App
  • Android App
  • Contact Us
  • Home
  • Markets
  • Sectors
  • Economy
  • Business News
  • Financial Literacy
  • Disclaimer
  • Ads Disclaimer
  • Copyright Infringement

© 2025 Nairametrics

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Social Media Auto Publish Powered By : XYZScripts.com
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
    • Economy
    • Nairalytics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Company Results
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Sectors
    • Agriculture
    • Aviation
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Health
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Renewables & Sustainability
    • Tech News
  • Business News
    • Budget
    • Public Debt
    • Funds Management
    • Tax
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
    • Research Analysis
  • Recapitalization
    • Access Holdings Offer
    • Fidelity Bank Offer
    • GTCO Offer
    • Zenith Bank Offer
  • Login
  • Sign Up

© 2025 Nairametrics