Flour Mills of Nigeria Plc in the six months ending September 30, 2024, reversed its losses posting a pre-tax profit of N19.7 billion.
This is according to the company’s unaudited financial statement for the second quarter of 2024/2025 reporting period ending September 2024.
The company in the period saw a reversal of fortunes from its performance in the same period of 2023/2024 where it posted a pre-tax loss of N8.13 billion.
Flour Mills during the period under review saw its revenues reach N1.69 trillion from N964.6 billion in the same period of 2023.
However, the cost of sales gulped around N90% of the revenues during the period at N1.53 trillion.
Key Highlights of the report
- Revenues- N1.697 trillion, +76% YoY
- Cost of sales- N1.536 trillion, +79% YoY
- Gross Profit- N161.09 billion, +53% YoY
- Selling and distribution expenses- N28.78 billion, +145% YoY
- Administrative expenses- N36.37 billion, +44% YoY
- Operating Profit- N105.94 billion, +40% YoY
- Foreign Exchange Losses- N46.54 billion, -9% YoY
- Finance cost- N43.96 billion, +27% YoY
- Profit Before Tax (PBT)- 19.75 billion, +342% YoY
- Tax expense- N5.33 billion, +2075% YoY
- Profit for the period- N14.41 billion, +271% YoY
- Earnings Per Share (EPS), 447kobo, +284% YoY
Commentary: The 79% increase in cost of sales nearly matching revenue, resulted in a gross profit margin squeeze, with gross profit up by only 53% to N161.09 billion.
This margin compression suggests that rising production or input costs are a significant challenge, reducing the efficiency of revenue growth in translating to gross profit.
- This is reminiscent of the company’s performance in the full year of 2023 where revenues reached N2.29 trillion but profit after tax was a marginal N3.54 billion with cost of sales in the period reaching N2.02 trillion.
- In the period under review, Flour Mills revenues were swallowed by a near 100% increase in raw materials from N786.5 billion in the same period of last year to N1.419 trillion. There was a significant increase in direct staff costs, probably due to the increase in minimum wage.
- Foreign exchange losses and finance costs added further strain, with foreign exchange losses declining slightly by 9% but remaining high at N46.54 billion, likely influenced by currency volatility. Finance costs rose by 27%, reflecting increased borrowing costs or a higher debt load.
- The company’s expenses on energy more than doubled during the period with power costs surging from N21.95 billion in the prior year to N46.79 billion.
- The food segment provided the highest revenue for the company raking in N1.14 trillion followed by the sugar segment which recorded revenues of N274.17 billion and Agro-allied segment with revenues of N251 billion during the period.