By Dipo Olowookere
On Friday, Flour Mills of Nigeria Plc released its audited financial statements for the full year ended March 31, 2019.
In the results briefly analysed by Business Post, the harsh operating environment and the challenging logistics situation ctreated by the Apapa gridlocl in Lagos continued to weigh on the firm.
This was evident in the revenue generated by Flour Mills, which went down to N527.4 billion from N542.7 billion. The traffic issue raised the cost of sales of the firm to N474.1 billion from N473.9 billion, while the selling and distribution expenses jumped to N8.2 billion from N6.2 billion, with the administrative expenses staying flat at N19.4 billion, same amount used a year earlier.
However, the company’s strategy to optmise the finance costs yielded a good result as this was slashed by 30 percent to N22.9 billion from N32.7 billion in the period under consideration.
A further analysis of the financial statements by Business Post showed that during the fiscal year, the gross profit of the firm dropped to N53.4 billion from N68.8 billion, while the operating profit reduced to N32.3 billion from N48.2 billion, with investment income going down to N768.6 million from NN816.3 million.
In the year, the profit before tax went down to N10.2 billion from N16.4 billion, while the profit after tax decreased to N4 billion from N13.6 billion, with the earnings per share reducing to N1 from N4.83k.
However, as a way to boost the morale of its shareholders, the board of Flour Mills is proposing the payment of N1.20k per share as dividend for the financial year, indicating a 20 percent increase from last fiscal year. Payment of this cash reward is subject to approval at the Annual General Meeting (AGM).
Commenting on the results, Group Chief Finance Officer of Flour Mills, Mr Anders Kristiansson, said, “Our strategy to restructure the balance sheet base and optimize the financing costs have started to yield the desired results, as the business showed increasing levels of efficiency.
“Despite ongoing pressures on consumer disposable income in many of our target categories, we continued delivered a stronger quarter 4 than last year.”
On his part, Group Managing Director of the flour miller, Mr Paul Gbededo, stated that, “We have made substantial progress this year, even in the face of an adverse and challenging business environment.
“Our growth and efficiency initiatives across our various functions and businesses have started to show anticipated gains as we continue to focus on organic sales growth and position the business for continuous profitability.”
Recall that in 2018, Flour Mills undertook a series of strategic actions designed to improve returns and deliver maximum gains for our investors. Top of such actions was the restructuring process that saw all the firm’s group businesses in the agriculture sector aligned under Golden Fertilizer company, a fully owned holding company.
According to a statement issued by company, the decision has already started to yield appreciable improvements within the group, in the areas of cost maximization and improved operational efficiency as the businesses make the most of their competitive advantage and synergies. This is further supported by the strong cost control measures that have been put in place by management within the year under review,
In the agriculture space, Flour Mills has continued to consolidate on its investments, with a strong focus on innovative and efficient use of resources.
Accordingly, the group is resizing and simplifying the operations of some of the farms which form an integral part of our backward integration strategy with a few of the smaller experimental farms being scaled-down, whereas we continue to focus on the key units.
