Companies
Nigeria’s border reopening will not impact profitability in 2021 – Flour Mills GMD
Flour Mills Nigeria Plc has stated that the recent reopening of the nation’s land borders will not affect the profitability of the company.
Mr. Omoboyede Olusanya, the Group Managing Director of Flour Mills Nigeria Plc has disclosed that the recent reopening of the nation’s land borders will not adversely impact the performance and profitability of the company in 2021 and beyond.
He added that FMN will continue to leverage brand loyalty, product standardization and innovation, as well as improved cost efficiency to increase profitability in 2021.
This statement was made by the Olusanya during the company’s 9M’20/21 Investor Webinar which held virtually on January 26, 2020.
According to the statement made by Mr. Olusanya at the virtual meeting, the reopening of the nation’s land border will not affect the company’s sales and revenue, as Flour Mills Nigeria is focused on increasing operational efficiency with accelerated plans for cost optimizations across the group to ensure competitive product offerings and profitability in the new operating environment, occasioned by the border reopening.
He revealed that the company will continue to invest in local content development, production capacity and aggregation to strengthen product innovation and product standardization in a bid to foster brand loyalty.
In line with this, Flour Mills Nigeria has invested heavily to upscale its Regional Distribution Centers (RDCs), in order to gain direct access to consumer market segments across the country, and expand consumer reach with the road to market initiatives and product offerings across the group, especially in the B2C segment.
Olusanya revealed that the group has successfully opened new regional distribution centers (RDCs) in Kano, Magboro and Abuja targeting the new fast-growing B2C product categories (fats, sugar and garri).
He added that the FMN Group among other strategic investments made, has invested in trucks to support the RDCs, animal feeds and starch value chains; as well as sales force automation platforms to ensure high-quality processes and services.
He concluded that the activities of the company will be complemented by the efforts of the nation’s border security, as these agents would ensure that the borders do not become porous, and would help to curtail markets from being proliferated by imported items.
What you should know
- Recall that Nairametrics reported that Flour Mills Nigeria Plc declared a profit of N5.65 billion in the third quarter ended, 31st December 2020.
- The report revealed that the profit which Flour Mills made in the third quarter of its accounting year 2020/2021 rose by a whopping 150.36% when compared to the profit it made in the corresponding period of 2019.
- It is important to note that the impressive performance of the company was driven by the agro-allied segment. The Agro-Allied segment benefited immensely from the August 2019 border closure, as the profit from this segment improved by 15,268%.
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MTN Nigeria declares largest ever revenue by a listed Nigerian entity for FY 2020
The strong revenue growth was basically due to its data-led segment as sales from the segment expanded by an impressive 51.5% Year to Year.
MTN Nigeria recently announced another ground-breaking full-year turnover in the financial year of 2020, the highest ever recorded by a Nigerian listed entity.
Specifically, the telecom giant’s revenue expanded by 15.1% year-to-year to N1.3 trillion in the review period. The strong revenue growth was basically due to its data-led segment as sales from the segment expanded by an impressive 51.5% Year to Year.
- Voice sales rose relatively by 5.6% year to year as the global switch to data-enabled communication subsisted.
- MTN Nigeria Plc also announced a N5.90/share final dividend on impressive growth in its free Cash Flow for the financial year of 2020.
- Notably, MTNN’s 4G network now covers 60.1% of the population compared to 43.8% in 2019.
- According to MTN Nigeria, the suspension of new SIM registration enforced in mid-December did not have a material effect on the voice segment, which managed a 10.6% YoY revenue growth in Q4’20 (vs 7.0% YoY in Q3’20).
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In contrast, data revenue growth notably moderated to 37.5% YoY in Q4’20 compared to 55.5% YoY in Q3’20.
In a research report released by CardinalStone, the most valuable telecom company’s margin was adversely affected by currency devaluation;
“Margins were adversely affected by the effect of naira devaluation and expenses associated with new sites’ roll-out to boost 4G network coverage in FY’20.
“On the former, we note that MTNN expanded the scope of its service agreement with IHS Holding Limited and changed the reference rate for converting USD tower expenses to NAFEX (vs CBN’s official rate previously). Thus, over the full-year period, the company’s operating margin contracted by 1.9 ppts YoY to 31.7%,” the report stated.
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The company’s margin was also negatively affected by the higher cost of borrowing and the ultra-low rates prevailing at Nigeria’s debt market;
“Net finance cost increased by 25.4% YoY on the impact of higher borrowings and lower interest on investment in government securities.
“Borrowings rose by over 26.3% to N521.2 billion in FY’20, after the company notably issued its N100 billion Commercial paper in June 2020. The effect of higher borrowings combined with a tax increase (a consequence of lower investment allowance and exempt income) to keep after-tax profit growth subdued at 0.9% YoY.”
That being said, in spite of its impressive growth in revenue the Stock was trailing by 3.28% trading at N174 per share.
