Cost of sales, which measures the direct costs of production, gulped as much as 90.7 per cent of the total earnings for the year compared to 86.2 per cent a year earlier.
Flour Mills of Nigeria grossed N1.2 trillion in turnover for the financial year 2021, pushing top-line more than a half higher above the figure for 2020, when N771.6 billion was recorded, data from the audited earnings report of the food processing firm showed on Tuesday.
The company, which aside flour manufacturing, produces pasta, sugar, vegetable and soya oils as margarine, earned the bulk of the revenue from sale of goods with the balance coming from rendering of services.
Cost of sales, which measures the direct costs of production, gulped as much as 90.7 per cent of the total earnings for the year compared to 86.2 per cent a year earlier.
And that could prove more burdensome this year given that Nigeria hinges on importation to meet about 98 per cent of its wheat need and the war between Russia and Ukraine (both of them among the world's top five wheat producers) is bound to heap more pressure on prices.
Finance costs - the costs incurred by the company in the process of borrowing funds - rose by over one-third in the period under review, putting more strain on earnings.
Profit before taxation rose to N39.2 billion, 5.2 per cent higher than what was reported a year ago, while after-tax profit advanced by 8.9 per cent to N28 billion.
That had negative implications for profit margin, with only 2.4 of the entire revenue for the year realised as profit.
In April, Flour Mills of Nigeria, currently Nigeria's biggest consumer goods company by revenue, got regulatory approvals to acquire a combined 76.8 per cent stake in rival Honeywell Flour Mills, with the latter's enterprise value put at N80 billion.
Flour Mills also controls a 53.1 per cent stake in another listed firm Northern Nigerian Flour Mills.
Analysts estimate the latest acquisition move narrow competition in a market where, as early as 2016, Flour Mills, Honeywell and Singaporean firm Olam together control over 70 per cent of the market.
In a separate note to the Nigerian Exchange on Tuesday, the board of Flour Mills proposed a dividend of N2.15 per share equivalent to N8.8 billion. That implies a 30 per cent increase over the payout for the financial year 2020.
