Flour Mills of Nigeria: Increase in revenue, investment income lift profits


By Kayode Tokede

Flour Mills of Nigeria Plc latest audited report and accounts for the financial year ended March 31, 2020 recorded significant increase in revenue and investment income that impacted positively on the company’s profitability.

The company’s reported 8.8 per cent increase in revenue while 211.3 per cent increase in investment income drive profit before tax by 72 per cent the financial year ended March 31, 2020.

With increase in profit, the management of Flour Mills of Nigeria proposed final dividend increase of 17 per cent to N1.40 for every ordinary share of 50 kobo from N1.20 paid shareholders by 2019 financial year

The group’s dividend Yield dropped by 23 basis points to 7.47 per cent in 2020 from 7.69 per cent in 2019.

The increase in revenue was driven by sale of goods 10.8 per cent N506billion in 2019 to N561.45billion reported in 2020 while rendering of services by the group gained 41.3 per cent to N20.99billion in 2020 from N12.33billion reported in 2019.

Revenues from one customer of the Group’s food segments represented approximately N12 billion (2019: N15 billion) of the Group’s total revenues.

The group is involved in milling and sales of flour and production and sales of pasta, snacks and noodles, and Agro Allied Farming of maize, cassava, soya, sugar cane and oil palm and production and sales of fertilizer, edible oils and livestock feeds.

Other segments are support Services Manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials and offer Port terminal operations, customs clearing and forwarding, shipping, haulage services and leasing of investment property, and  Sugar Cultivation and processing of sugarcane, refining and selling of sugar and sale of by-products from sugar refining.

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 was not a rosy for Flour Mills of Nigeria as the company was faced with challenges associated with roads in and around Tin Can and Apapa ports, which is affecting businesses operating from that axis.

The existing ports in Lagos are overcrowded as there is the need for government to address these challenges to improve trade movement.

Also, the subdued performance of the company was due to price wars the Fast-Moving Consumer Goods (FMCG) sector operators are currently facing due to smuggling of unlicensed and sub-standard grey foods which have posed a challenge to company earnings.

Recently, Flour mills Flour Mills made products and cash donations to some orphanage homes as part of its corporate social responsibility programmes.

The foremost producer of wheat based products also restated its commitment to positively impact on humanity by giving back to the society through effective CSR activities.

Increase in profit backed by investment income, revenue

Flour Mills of Nigeria reported 7.2 per cent increase in Cost of Sales (CoS) to N507.99billion in 2020 from N474.06billion in 2019 to consequently position COS/ revenue in the review year at 88.5 per cent from 89.9 per cent reported in 2019.

However, total operating expenses (Opex) rose by 18.25 per cent in 2020 to N32.6billion from N27.59 billion reported in the erstwhile year results.

The breakdown of Flour Mills of Nigeria total operating expenses include selling and distribution expenses that increased by 9.3 per cent to N13.6billion from N9.28 billion while Administrative expenses increased by 23.3 per cent to N20.19 billion from N19.42 billion recorded in the financial year ended March 31, 2019.

Flour Mills of Nigeria’s Operating profit closed 2020 at N35.08billion from N32.3 reported in March 31, 2019  over interest income from short term investments and bank deposit.

Finance cost thus dropped by 12/7 per cent to N19.98billion in 2020 from N22.89billion reported in 2019.

Flour Mills of Nigeria plc announced its audited financial results for full year ended March 31, 2020 with Profit Before Tax gaining 72.07 per cent to N17.05billion as against N10.17billion reported in 2019.

Also, Profit After Tax increased by 184 per cent to N11.4billion in 2020 from N4billion reported in 2019.

The underlying fundamental of the company remained weaker, unlike prior year outcome results.

Gross profit margin moved from 10.11per cent to 11.5 per cent while profit margin dropped to 3.05 per cent from 1.93 per cent in 2019.

Stronger financing structure in assets

Flour Mills of Nigeria total assets increased by 3.75 per cent to N432billion in the financial year ended March 31, 2020 from N416 billion reported in 2019, attributable to 52.34 per cent increase in Cash and cash equivalent to N26.2 billion in the financial year ended March 31, 2020 from N17.21 billion recorded in 2019.

Long-term assets increased by about 2.6 per cent from N236.55billion to N242/7 billion in 2020 while current assets rose by 5.2 per cent to N189.7 billion from N180.3 billion.

Shareholders’ funds increased by 3.20 per cent to N155.81billion in the financial year ended March 31, 2020 from N150.81 billion in 2019.

Total Liabilities closed 2020 at N276.65billion, 4.06 per cent increase from N265.85billion reported in 2019.


The company secretary/director, legal services, Umolu Joseph in a signed statement said, “Despite the prevailing economic headwinds and difficult operating terrain of Apapa, the Group had a prosperous and successful year.

“In line with management’s to continue to stimulate organic growth in all segments of the business, Agro-Allied division reached profitability in 2019/2020 behind the consistent and focus and focused investments that have been made in this locally sourced segment over the last few years.

“The Agro-allied segment saw strong profit growth in oils and Fats and Proteins with Gross Profits more than doubling in both segments on annual basis.

“Our Food business recorded accelerated growths within the business-to-consumer (B2C) segment in line with projections, as our focus to improve customer experience saw the introduction of a range of new products and our strategic marketing and promotional activities to win over new market segments yielded the desired result.”

Commenting on the result, The Group Managing Director, Paul Gbededo said, “The 2019/2020 year was a remarkable year for our Group and am really pleased with the result.

“How Profit before Tax saw a remarkable increase of 72per cent to 17.5 billion, while our Profit after Tax nearly tripled from N4 billion last year to 11.4 billion Naira in the current year. This is partly attributable to the improved performance of our Agro Allied Businesses and in line with our strategy to continue to grow wealth of our stakeholders.”

He further stated, “We  will remain focused on increasing operational efficiency within the group as we continue to implement our accelerated cost optimization plans across businesses to ensure profitability in the new operating environment.”