Economy
Flour Mills Sells N5bn Commercial Papers to Improve Margins
By Modupe Gbadeyanka
In order to get funds to execute some of its short-term operations that could improve profitability and margins, the management and board of Flour Mills of Nigeria Plc have concluded to sell commercial papers worth N5 billion to interested investors in the local debt market.
Business Post gathered that the flour milling company is offering the notes, which are part of the N100 billion CP programme, at a discount rate of 8.88 percent, with an effective yield of 9.50 percent.
It was learned that application for the exercise is expected to close on Thursday, December 12, 2019, with the settlement fixed for Friday, December 13, 2019.
Subscribers, who hope to buy the papers, which mature on Tuesday, September 8, 2020, are required to purchase a minimum of N5 million, with more subscriptions in multiples of N1,000.
Flour Mills said in a statement that it expects to meet its targets in the present financial year because it was resizing and simplifying operations of some of the farms, which form an integral part of its backward integration strategy with a few of the smaller experimental farms being scaled down, while continuing focus on key units.
According to the company, the consolidation of its agricultural businesses has started yielding appreciable contributions to the group in the areas of cost maximisation and improved operational efficiency as the businesses make the most of their competitive advantage and synergies.
It noted that despite the prevailing economic headwinds and harsh operating environment, especially for businesses in the congested Apapa, Lagos axis, the strong cost control measures put in place during the year has supported its growth projections.
Flour Mills expressed optimism that it would witness continuous growth in key segments of its food and agro-allied businesses in the new business year, noting that targeted strategies are expected to deliver improved margins and operational efficiencies.
It noted that the continuous implementation of turnaround initiatives in the agro-allied business, accelerated expansion in the business-to-customer segment, optimal operation of its supply chain and further balance sheet management are expected to result in higher profitability.
Recall that in 2018, the firm undertook series of strategic actions designed to improve returns and deliver maximum gains for its investors, including the restructuring process that saw all its businesses in the agriculture sector aligned under its wholly owned holding company, Golden Fertiliser Company.
But despite these actions, Flour Mills of Nigeria has witnessed contractions in sales and profitability in the immediate past business year as net profit declined by 70.6 percent from N13.6 billion in 2018 to N4 billion in 2019.
Gross profit margin dropped from 12.7 percent in 2018 to 10.1 percent in 2019, with net profit margin reducing to 0.8 percent in 2019 as against 2.5 percent in 2018.
However, the group’s debt-to-equity ratio improved from 101.7 percent in 2018 to 84.1 percent in 2019.
Also, in the financial year ended March 31, 2019 the company’s turnover went down by 2.8 percent to N527.40 billion from N542.67 billion in 2018, while the gross profit dropped by 22.4 percent from N68.8 billion in 2018 to N53.3 billion in 2019. Profit before tax declined by 38.5 percent to N10.17 billion in 2019 as against N16.54 billion in 2018.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited witnessed Santa Claus rally on Wednesday after it closed higher by 0.12 per cent.
Strong demand for Nigerian stocks lifted the All-Share Index (ASI) by 185.70 points during the pre-Christmas trading session to 153,539.83 points from 153,354.13 points.
In the same vein, the market capitalisation expanded at midweek by N118 billion to N97.890 trillion from the preceding day’s N97.772 trillion.
Investor sentiment on Customs Street remained bullish after closing with 36 appreciating equities and 22 depreciating equities, indicating a positive market breadth index.
Guinness Nigeria chalked up 9.98 per cent to trade at N318.60, Austin Laz improved by 9.97 per cent to N3.20, International Breweries expanded by 9.85 per cent to N14.50, Transcorp Hotels rose by 9.83 per cent to N170.90, and Aluminium Extrusion grew by 9.73 per cent to N16.35.
On the flip side, Legend Internet lost 9.26 per cent to close at N4.90, AXA Mansard shrank by 7.14 per cent to N13.00, Jaiz Bank declined by 5.45 per cent to N4.51, MTN Nigeria weakened by 5.21 per cent to N504.00, and NEM Insurance crashed by 4.74 per cent to N24.10.
Yesterday, a total of 1.8 billion shares valued at N30.1 billion exchanged hands in 19,372 deals versus the 677.4 billion shares worth N20.8 billion traded in 27,589 deals in the previous session, implying a slump in the number of deals by 29.78 per cent, and a surge in the trading volume and value by 165.72 per cent and 44.71 per cent apiece.
Abbey Mortgage Bank was the most active equity for the day after it sold 1.1 billion units worth N7.1 billion, Sterling Holdings traded 127.1 million units valued at N895.9 million, Custodian Investment exchanged 115.0 million units for N4.5 billion, First Holdco transacted 40.9 million units valued at N2.2 billion, and Access Holdings traded 38.2 million units worth N783.3 million.
By Adedapo Adesanya
Nigerian food and beverage company, Rite Foods Limited, has extended warm Yuletide greetings to Nigerians as families and communities worldwide come together to celebrate the Christmas season and usher in a new year filled with hope and renewed possibilities.
In a statement, Rite Foods encouraged consumers to savour these special occasions with its wide range of quality brands, including the 13 variants of Bigi Carbonated Soft Drinks, premium Bigi Table Water, Sosa Fruit Drink in its refreshing flavours, the Fearless Energy Drink, and its tasty sausage rolls — all produced in a world-class facility with modern technology and global best practices.
Speaking on the season, the Managing Director of Rite Foods Limited, Mr Seleem Adegunwa, said the company remains deeply committed to enriching the lives of consumers beyond refreshment. According to him, the Yuletide period underscores the values of generosity, unity, and gratitude, which resonate strongly with the company’s philosophy.
“Christmas is a season that reminds us of the importance of giving, togetherness, and gratitude. At Rite Foods, we are thankful for the continued trust of Nigerians in our brands. This season strengthens our resolve to consistently deliver quality products that bring joy to everyday moments while contributing positively to society,” Mr Adegunwa stated.
He noted that the company’s steady progress in brand acceptance, operational excellence, and responsible business practices reflects a culture of continuous improvement, innovation, and responsiveness to consumer needs. These efforts, he said, have further strengthened Rite Foods’ position as a proudly Nigerian brand with growing relevance and impact across the country.
Mr Adegunwa reaffirmed that Rite Foods will continue to invest in research and development, efficient production processes, and initiatives that support communities, while maintaining quality standards across its product portfolio.
“As the year comes to a close, Rite Foods Limited wishes Nigerians a joyful Christmas celebration and a prosperous New Year filled with peace, progress, and shared success.”
By Adedapo Adesanya
The Naira closed the pre-Christmas trading day positive after it gained N6.61 or 0.46 per cent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, December 24, trading at N1,443.38/$1 compared with the previous day’s N1,449.99/$1.
Equally, the Naira appreciated against the Pound Sterling in the same market segment by N1.30 to close at N1,949.57/£1 versus Tuesday’s closing price of N1,956.03/£1 and gained N2.94 on the Euro to finish at N1,701.31/€1 compared with the preceding day’s N1,707.65/€1.
At the parallel market, the local currency maintained stability against the greenback yesterday at N1,485/$1 and also traded flat at the GTBank forex counter at N1,465/$1.
Further support came as the Central Bank of Nigeria (CBN) funded international payments with additional $150 million sales to banks and authorised dealers at the official window.
This helped eased pressure on the local currency, reflecting a steep increase in imports. Market participants saw a sequence of exchange rate swings amidst limited FX inflows.
Last week, the apex bank led the pack in terms of FX supply into the market as total inflows fell by about 50 per cent week on week from $1.46 billion in the previous week.
Foreign portfolio investors’ inflows ranked behind exporters and the CBN supply, but there was support from non-bank corporate Dollar volume.
As for the cryptocurrency market, it witnessed a slight recovery as tokens struggled to attract either risk-on enthusiasm or defensive flows.
The inertia follows a sharp reversal earlier in the quarter. A heavy selloff in October pulled Bitcoin and other coins down from record levels, leaving BTC roughly down by 30 per cent since that period and on track for its weakest quarterly performance since the second quarter of 2022. But on Wednesday, its value went up by 0.9 per cent to $87,727.35.
Further, Ripple (XRP) appreciated by 1.7 per cent to $1.87, Cardano (ADA) expanded by 1.2 per cent to $0.3602, Dogecoin (DOGE) grew by 1.1 per cent to $0.1282, Litecoin (LTC) also increased by 1.1 per cent to $76.57, Solana (SOL) soared by 1.0 per cent to $122.31, Binance Coin (BNB) rose by 0.6 per cent to $842.37, and Ethereum (ETH) added 0.3 per cent to finish at $2,938.83, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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