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Business News of Monday, 1 August 2022


Flour Mills’s first-quarter profit only 1% up despite record N339.6 billion turnover

A Golden Penny truck used to tell the story A Golden Penny truck used to tell the story

Flour Mills of Nigeria Plc attained a record level in first-quarter revenue for the three months to June 2022 as sales enlarged almost by half to N339.6 billion, according to its earnings report.

The firm’s rocketing costs howeber meant profit would grow only a trifle bigger than a year ago.

The food processing titan which, besides flour manufacturing, counts making of pasta, noodles, refined sugar, edible oil alongside agro-allied activities among its operations, had posted N233.7 billion in turnover in the same period of 2021.

It cited, in a separate document on Monday, expansion into new and rural markets including “growth of breakfast cereals in the Eastern states, Abuja, and implementation of innovative marketing strategies to serve the rural markets” as drivers.

The weight of costs on earnings was most felt through cost of sales, which revved up 47 per cent to N306.4 billion by reason of a spike in material costs, all alone accounting for nine-tenths of that expenditure category.

“Our increased operational efficiency with accelerated plans for our supply chain optimization, content localization, and cost optimization across our business segments has helped to cushion the sharp rise in the cost of raw materials,” said Omoboyede Olusanya, the firm’s chief.

Rising by 0.9 per cent, profit before tax stood at N7.33 billion, compared to N7.26 billion a year earlier. Profit for the period climbed 0.9 per cent to N5.5 billion.

Net profit margin, the performance metric that gauges how much of revenue has turned into profit, was 1.6 per cent.

Flour Mills said it added 8,000 new outlets during the period under review.

Last week, the corporation announced it would, following the approval of the Securities and Exchange Commission, initiate a mandatory tender offer in a push to procure 1 per cent or 79.3 million shares from shareholders of Honeywell Flour Mills.

Earlier in April, it obtained a controlling stake of 71.7 per cent in the rival flour-maker for a total enterprise value of N80 billion.