Flour Mills of Nigeria Plc has found its way back into profit in its first quarter operations, recording almost N7 billion despite the continuing foreign exchange losses which peaked at over N28 billion.
The company escaped a net loss of N9.3 billion in the same period last year and a pre-tax loss of N236.7 million at the end of the preceding financial year last March.
The almost N7 billion after-tax profit recorded by the company was extracted from a mix of a strong topline amid cost increases and slowdowns according to the first quarter financial report of the food and agro-allied company at the end of June 2024.
The strength in sales is going for the company for yet another year and costs aren’t growing as rapidly as last year – which is the propelling force for the Flour Mills turnaround in the first quarter.
The company grew sales revenue by 67.2 percent year-on-year to over N763 billion in the first quarter, accelerating for the second year from 32.3 percent growth in 2023 and 48.8 per cent in the 2024 financial year.
Again, the sugar business led the revenue growth, increasing 92.2 percent to N127.8 billion in the first quarter. This is followed by support services that grew sales by 85.4 percent to N11.8 billion.
The food segment continued to dominate volume with N489.4 billion in sales – an increase of 61 percent year-on-year. The agro-allied segment follows on the volume lead with sales revenue of over N134 billion, representing an increase of 68 percent.
The strong growth in sales is further boosted by some cost savings from input expenses, helping sales to grow at 66.5 per cent to N676.3 billion. The slowdown powered gross profit, recording 72.7 percent growth to N86.9 billion.
A challenge came from selling and distribution costs, which rose well ahead of sales revenue at 125.3 percent to stand at N13.5 billion at the end of the first quarter. Pressure also came from net operating losses that soared by 107.3 percent over the period to N6.7 billion.
These are in addition to the net foreign exchange loss of N28 billion in the quarter, rising from the N22.5 billion figure the company incurred in the same quarter last financial year. This is a strong slowdown in exchange losses compared to the previous financial year when the losses multiplied more than four times to N137.5 billion for the full year.
On the side of cost savings are administrative expenses which grew by 42 per cent to N16 billion and finance expenses which closed slightly down at N16 billion at the end of the first quarter. The cut in finance expenses appears to reflect a reduction in the company’s borrowings from N405.8 billion at the end of the preceding financial year to N386.8 billion at the end of June 2024. The figure excludes lease liabilities over N29 billion.
This is a big difference from the preceding year when finance costs advanced by 139.4 per cent to roughly N209 billion. The rise in exchange losses undermined profit delivery in the preceding financial year while the slowdown in the first quarter enabled the recovery of the company.
The strong profit rebound in the first quarter raises hopes for the year after the bottom line plunged from N29.5 billion to N3.5 billion in the prior financial year.
