• Flour Mills of Nigeria (FMN) remains one of the largest consumer conglomerates in Nigeria. With operational capability in flour milling, sugar refinery, palm oil production, and packaging materials, the company controls significant market share across its business divisions.
• Flour Mills of Nigeria is an active player in the Debt Capital Market accessing funds to support their working capital needs as well as other short-term expenditures and has a strong reputation for timely repayment at maturity.
• The FMN rating of “A- “by Augusto & Co and “A” by DataPro shows its strong financial position, extensive distribution network, and dominant market share in the Nigerian food industry.
• FMN’s revenue in 2022 achieved over a trillion (N1,114 trillion) revenue demonstrating sustained momentum across all business segments compared to the previous year (N825 billion), joining a select group of Nigerian companies with such a feat. In the past three years, sales have increased at an average rate of 30% owing to impressive demand for the company’s product, its superior product, and its strong ability to determine sales prices. The 9M ’23 results show remarkable revenue growth because of continued focus on retail expansion and proactive pricing to cushion steep input costs.
• We expect FMN to improve in profitability over the coming year.
The acquisition of Honeywell naturally caused a temporary increase in the debt, which is foreseen to be reduced over the next year. Currently, the company’s debt portfolio is dominated by long-term debt (about 60% of total debt). Also, the company has significant liquidity and is highly solvent. As of Q3’22 (end-Dec), the company had an interest coverage ratio of 1.5x as well as a debt-to-capital ratio of 60%.
• Dividend payments in the last decade have been stable and consistently growing. In 2022, the company dividends payment grew 30% y/y to NGN8.82bn.
Why Should I Invest in Flour Mills of Nigeria Ltd?
1. FMN has consistently adopted the Debt Capital Market tools to deleverage the Balance Sheet and enhance company earnings.
2. FMN PLC has invested more than N150 billion over the past ten years to execute its core business strategy to aid the agricultural sector. This signifies that FMN is a key player in the Nigerian agricultural sector and has been a major contributor to ensuring that the agricultural production targets of Nigeria are met.
3. FMN has a good credit history and rating, hence access to bank financing.
4. Flour Mills Strategies to maintain its leadership position in the Market FMN has “A- “by Augusto &Co and “A” by DataPro which reflects their financial position.
5. Strong and loyal customer base.
6. Highly experienced and competent Board and Management Team.
7. Strong supply chain.
8. Plant Capacity utilization level of 70% which is above the industry average of 50%.
9. Strong company pedigree and heritage
10. FMN has Strong brand value and visibility via widely accepted brands i.e. Golden Penny brand of products.
11. FMN is an active player in performing Corporate Social Responsibility duties, for example in ensuring that there is a reduction in carbon footprint which is vital in ensuring that climate goals are met. This is an indication that FMN PLC is committed to a safer future for future generations.
This is great, I think it’s a good one for the FMN in my humble opinion.