Economy
Flour Mills Raises Dividend Payout by 17% as Profit Jumps 185%
By Dipo Olowookere
Shareholders of Flour Mills of Nigeria Plc will receive a higher dividend this year than they got from the company last year.
This is because the board of the flour miller has increased the dividend payout for the 2019 financial year by about 17 per cent.
On Monday, August 3, 2020, the firm released its financial statements for the year and from the analysis by Business Post, the shareholders will get a cash reward of N1.40 for each of their company’s stocks in their portfolio. For the 2018 fiscal year, investors were paid N1.20 per unit.
In a notice today, Flour Mills said it will pay the dividend to shareholders on Monday, September 14, 2020, directly to their bank account.
However, the beneficiaries will only be those whose names appear on the register of members as at the close of business on Friday, August 14, 2020, while the register will be closed from Monday, August 17 to Friday, August 21, 2020.
Business Post observed from the financial status of Flour Mills that it had a fruitful 2019 as the revenue grew to N573.8 billion from N527.4 billion despite the hard operating environment, which prevented the company to export some of its products through the land borders to neighbouring countries.
The increase in the turnover was only boosted by the higher local demand for the company’s flour, pasta, snacks and noodles, contributing N358.4 billion to the total turnover compared with the previous year’s N335.6 billion, while the sale of agro-allied products and sugar accounted for N105.5 billion (versus N88.1 billion in FY’19) and N97.6 billion (versus N82.7 billion in FY’19) respectively.
According to the firm, revenue from customers domiciled in Nigeria amounted to N569.4 billion (2019: N520.2 billion), while revenue from foreign customers (export revenue) amounted to N4.3 billion (2019: N7.2 billion.
It further said one of its major customers from the food segments represented approximately N12 billion (2019: N15 billion) of the group’s total turnover.
In the year, the cost of sales jumped to N508.0 billion from N474.1 billion in 2019 as a result of the higher cost of raw and packaging materials and production employee costs.
During the period, the gross profit increased to N65.8 billion from N53.4 billion, while the net operating gains dropped to N4.9 billion from N6.2 billion despite an increase in fair value gain on derivatives, government grants, insurance claim and rental income.
The net operating gains were impacted negatively by loss on exchange differences loss on disposal of property, plant and equipment as well as sundry loss.
Furthermore, the selling and distribution costs rose to N9.3 billion from N8.2 billion, while the administrative expense jumped to N23.4 billion from N19.4 billion, leaving the operating profit at N35.1 billion as against N32.3 billion in FY 2019.
In the period under consideration, the investment income of Flour Mills rose significantly to N2.4 billion from N768.6 million, while the finance costs went down to N20.0 billion from N22.9 billion.
The profit before tax appreciated to N17.5 billion from N10.2 billion, while the net profit astronomically jumped by 185 per cent to N11.4 billion from N4.0 billion.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market was up on Friday on increasing expectations the US Federal Reserve will cut interest rates next week, which could boost economic growth and energy demand.
Brent futures rose by 49 cents or 0.8 per cent to $63.75 per barrel and the US West Texas Intermediate (WTI) futures expanded by 41 cents or 0.7 per cent to $60.08 per barrel.
Investors digested a US inflation report and recalibrated expectations for the Federal Reserve to reduce rates at its December 9-10 meeting.
US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lackluster labor market and the rising cost of living curbed demand.
Traders have been pricing in an 87 per cent chance that the US central bank will lower borrowing costs by 25 basis points next week, according to CME Group’s FedWatch Tool.
Investors also focused on news from Russia and Venezuela to determine whether oil supplies from the two sanctioned members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase or decrease in the future.
The failure of US talks in Moscow to achieve any significant breakthrough over the war in Ukraine has helped to boost oil prices so far this week.
A loss of Venezuelan oil production in case of a US military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude.
Venezuela is estimated to pump about 1.1 million barrels per day of crude oil at present, so if the US-Venezuela tension escalation into an invasion in the South American country, this volume of crude would be at risk.
Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia’s war in Ukraine.
Any deal that could lift sanctions on Russia, the world’s second-biggest crude producer after the US, could increase the amount of oil available to global markets, weakening prices.
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