Revenue improved by almost one-third from N1.2 trillion a year earlier. But profit for the year is nothing compared to top line in performance, seeing a sluggish single-digit growth of 5.3 per cent
Flour Mills of Nigeria Plc posted revenue in excess of N1.5 trillion for the year ended 31 March, 2023, according to its audited financial report released on Tuesday, its biggest-ever annual turnover.
Revenue improved by almost one-third from N1.2 trillion a year earlier. But profit for the year is nothing compared to top line in performance, seeing a sluggish single-digit growth of 5.3 per cent and representing less than 2 per cent of turnover.
Nigeria's pioneer wheat miller, which imports nearly all of its core raw material wheat, took a double blow from a supply chain disruption occasioned by Russia's war with Ukraine, two of the world's biggest producers of the commodity, which has sent wheat prices skywards.
The company also suffered from an unusually huge foreign exchange loss following the country's recent foreign exchange reforms.
Flour Mills, also a maker of sugar and edible oil as well as a provider of port, rental and agro-allied services, frequently surpasses Nigeria's biggest banks in revenue.
Yet, its net profit is often negligible compared to top line because margin in the consumer goods sector where it operates is typically thin and the raw material of its main subsidiary is largely imported, vulnerable to price volatility.
Excelsior Shipping Company, a Liberia-registered firm established by the late Greek magnate George Coumantaros, holds 63.3 per cent of Flour Mills' issued shares, represented by John George Coumantaros, the chair of the company's directors board.
Cost of sales for the period under review climbed to N1.4 trillion, consuming 88.5 per cent of turnover, driven by an increased cost of raw and packing materials.
Net operating losses stood at N21.8 billion compared to N135.9 million the preceding.
Last May, the food company bought a 77.8 per cent interest in listed rival Honeywell Flour Mills, making the latter its 17th subsidiary.
The group also holds the majority stake of 60 per cent in another listed firm Northern Nigeria Flour Mill.
However, a couple of the subsidiaries have been heaping up losses with negative implications for the group's bottom line.
"The carrying amount of the company's investment in subsidiaries is significant. Some of these subsidiaries are currently loss-making and a number of them are dependent on financial support, mostly in form of loans and advances from the parent company for their ongoing operations," KPMG, the independent auditor, said in a report accompanying the document.
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Flour Mills set aside N1.5 billion to cover impairment loss on trade and intercompany receivables in contrast to a writeback of N415.2 million a year earlier.
Finance costs more than doubled to N55.7 billion, spurred by a steep rise in interest on bank loans and overdrafts. Profit after tax came to N29.5 billion up from N28 billion.
The company's share price went up by 10 per cent on news of a proposed dividend per share of N2.25 (totalling N9.2 billion), compared to N2.15 (totalling N8.8 billion) a year ago.
Flour Mills has returned only 16.2 per cent, lagging the NGX Consumer Goods Index, which has yielded 42.7 per cent and peers like FTN Cocoa and NASCON, which have added as much as 666 per cent and 387 per cent respectively.
