FMN maintains upward trajectory as revenue up 38%, despite challenges in macroeconomic environments


By Philemon Adedeji

Flour Mills of Nigeria, a listed company on the Nigerian Exchange Limited (NGX) has reported solid performance in its unaudited half year results ended September 30th, 2023. The group reported upward performance across its business segment to continue to maintain its position as a leading agro-allied company.

According to the analysis, the group reported its overall revenue which increased significantly by 38 per cent to N721 billion in first half 2023 from N522.8 billion reported in first half 2022 propelled by a favourable mix and some exchange related pricing.

Result shows strong revenue growth across business segments, despite the challenging macroeconomic environment.

The key segments that contributed to the significant improvement in revenue are, Golden Sugar, Agro-allied, Food, Support Segments.

The breakdown of the revenue showed that, the revenue generated from the golden sugar increased in double-digit to 51 per cent to N104.7 billion in half year 2023 from N69.5 billion in half year 2022 and a solid profit growth due to increase in volume and various customers engagement efforts to drive customer loyalty,  as the strong revenue growth averaging by 36 per cent across all business segments.

Consequently, there was a rebound in the segments Profit Before Tax (PBT) behind the revenue growth and a more normalised trading environment.

The group continues to see persistent demand for  brown sugar products from industrial customers in the North.

Additionally, the business continues to progress on its backward integration initiatives on Sugar production by engaging in continuous development of the upland area to expand the area under cultivation.

The Sugar business has been unaffected by the recent floodings with the interventions prepared over the last two years.

The revenue generated from Agro-Allied gained a decent 52 per cent to N153.9 billion in H1’23 from N101.1 billion generated in H1’22, while revenue generated from sales of Support grew significantly by 10 per cent to N16.3 billion in H1’23 from N14.8 billion achieved in H1’22.

The food segment performance was mainly driven by increased B2C volume contribution increased from 34 per cent in Q2’22 to 38 per cent in Q2’23, the company invested in products like (Flour, Pasta, Ball foods, Noodles, others).

The volume growth in breakfast cereal (Amazing Day) contributed 67 per cent in Q2’23. The Honeywell business is being restructured and integrated in to the group. Focus has been ensuring the commercial strategy and resulting integration plus manufacturing stability.

While, Allied agro segment contributed 52 per cent to revenue, key factors that contributed to the growth are oil and fats business that rose its revenue by 98 per cent due to increase in volume arising from amplified to milling activities in the North and West to meet up with customer demand.

Also, the agro-allied segment growth of FMN’s on fertilizer revenue growth largely rose by 74 per cent driven by increase in volumes and reduced a cost is Q2’23 following commissioning of the new fertilizer blending plant in May 2022 with 90MTPH capacity.

In addition, Support Segment contributed 10 per cent to revenue, the key drivers that contributed to the growth are significant improvement in Bagco revenue and GTC revenue, the packaging business delivered 12 per cent growth in revenue during the period, despite an overall reduced demand for consumer goods packaging material. The business continues to prioritise high value bags towards margin build.

Golden Transport Company, the transportation and logistics business achieved 24 per cent revenue growth driven by acquisition of new trucks and management of honey well truck.

Operating performance in the Food segment remained solid, despite a challenging environment with increased input prices and somewhat softening volume base; Profit Before Tax for Agro-Allied remained at the level achieved the last year; Sugar segment recorded a significant rebound compared to Q2’21 as anticipated behind a normalised competitive playing field, increased route to market expansion into both new and rural markets and increased customer engagement initiatives.

Amid macroeconomics headwinds, among others, the group deployed 39 per cent growth in cost of sales (CoS) to N651.8 billion in H1’23from N468.4 billion reported in H1’22.

The interplay between revenue and cost of sale drive the company gross profit to grew marginally by N68.8 billion in H1’23 from N54.4 billion in H1’22 to position gross margin at 9.3 per cent in H1’23 from 9.9 per cent in H1’22.

The Flour Mill on Nigeria Group recorded a profit before tax of N8.4 billion as of H1’23, compared to N15.5 billion H1’22, due to Honeywell related transition and integration related costs.

Absolutely, Profit After Tax dipped by 46 per cent in the first half of 2023 to N5.7 billion from N10.5 billion in the first half of 2022.

Flour Mill of Nigeria reported Earnings Per Share (EPS) of N197 per share in the first half of 2023 lower from N243 per share in the same period last year.

The Nigeria’s leading integrated food business and Agro-allied group grew its balance sheet by 73.42 per cent to N929.7 billion in H1 2023 from N536.09 billion in H1 2022, while its total equity declined by 64 per cent to N196.09 billion in H1 2023 from N544.73 billion in H1 2022.

Analysis of the movement in cash and cash equivalents indicate that net cash flow from operating activities was negative during the period, which amounted to N6 billion dropped from N28.2 billion accounted in the first half of 2022.

Cash and cash equivalent reported by the manufacturing company depreciated by 21.80 per cent in the first half of 2023 to N40.94 billion from N52.35 billion in the corresponding period of 2022.

Amid macroeconomic headwinds, among others, the group deployed 39 per cent growth in cost of sales (CoS) to N651.8 billion from N468.4 billion reported in H1’ 22.

However, operating expenses inched weight by 14 per cent to N26 billion in H1’23 from N22.8 billion deployed in H1’22, while finance cost increased stronger to N22.3 billion in H1’23, a marginal difference of 139 per cent from N9.3 billion reported in H1’22.

The Group is integrating the Honeywell business to realise the synergies anticipated with focus on restructuring the balance sheet to reduce FX exposure and ensure manufacturing stability. This is expected to lead to strong results in the long term.

Net finance costs increased significantly by 223.8 per cent year-on-year (Y-o-Y) following a 196.7 per cent Y-o-Y increase in finance costs and a 59.6 per cent (Y-o-Y) decline in finance income. The higher finance cost reflects FLOUR MILL’s increased debt profile (H1-23: N334.60 billion against FY-22: N158.80 billion) following the addition of Honeywell’s debt to its books.

The Vice Chairman of Highcap Securities Limited, David Andori, said, “This is an impressive performance by Flour Mills. It is a reflection of the management capability of the company. Rising cost of operations which has adversely affected many companies did not eat up Flour Mills’ profit. This result tells us that investors in the company will smile at end of the year.

“According to cordros research, as noted in our Q1-23 First Glance, FLOUR MILLS’ result reflects the company’s innovation around product offerings and tapping directly into the B2C segment. However, we are concerned about the company’s ballooning finance costs, following the significant effect on the company’s profitability. While we note that cost pressures remain existent, we believe the company remains well-positioned to maintain decent topline growth given its well-diversified product portfolio and the inelastic demand for its products.”


FMN is dedicated to achieving strategic growth opportunities, both organic and inorganic, within the sector.

Commodity prices and input costs are decreasing as the impact of the war between Russia and Ukraine is lessened with the overall supply chains adjusting. Any potential FX adjustments over the next months are being closely followed.

Performance of Sweeteners is foreseen to strengthen over the next two quarters, with the value chain being very attractive in the long run.

Honeywell operations are stabilizing and anticipated to be a very strong revenue and profit stream in the long run after integration of the operations and the balance sheet restructuring are concluded.

The Group will continue to fill the needs of the consumers with route to market and new product initiatives across the group, investment in production capacity and increasing aggregation/sourcing.

Increase operational efficiency with accelerated plans for cost optimizations across the Group to ensure competitive product offerings and profitability in the new operating environment.


Commenting on the result and the Group’s strategic imperatives in the years ahead the Group Managing Director/Chief Executive Officer, Mr Boye Olusanya said, “FMN continues to meet the needs of the consumers with our sustainable route-to-market structure and new product initiatives across our touchpoints. As we can see in the H1 22/23 report, the Sugar segment recorded a significant rebound compared to H1’21/22, a clear demonstration of the Group’s continuous and significant investment in the sugar value chain and across all our key value chains and sectors.

“As the Group continues to make headway in our backward integration activities through various strategic efforts, we remain committed to feeding the nation, every day.

“Also, our investment in product innovation and supply chain optimisation was sustained in furtherance of the execution of our long-term strategy. As part of the Group’s strategic roadmap, FMN continues to put in place a business continuity plan to safeguard its supply chain and food production processes to ensure that Nigerians can continue to have access to their daily nourishment.”