Flour Mills of Nigeria Plc witnessed contractions in sales and profitability in the immediate past business year, as net profit declined by 70.6 per cent from N13.6 billion in 2018 to N4 billion in 2018.

Key extracts of the audited report and accounts of the company for the year ended March 31, 2019 showed that trunover dropped by 2.8 per cent from N542.67 billion in 2018 to N527.40 billion in 2019. Gross profit dropped by 22.4 per cent from N68.8 billion in 2018 to N53.3 b illion in 2019. Profit before tax declined by 38.5 per cent to N10.17 billion in 2019 as against N16.54 billion in 2018. After taxes, net profit dropped by 70.6 per cent to N4 billion in 2019 as against N13.6 billion in 2018. Consequently, earnings per share dropped from N4.83 in 2018 to N1 in 2019.

The board of directors of the food group has, however, recommended increase in dividend payout by 20 per cent, opting to dip into the group’s retained earnings to support the increase. Shareholders will receive a dividend per share of N1.20 for the 2019 business year as against N1 paid for the 2018 business year.

Further analysis showed a decline in the underlying profitability of the group. Gross profit margin dropped from 12.7 per cent in 2018 to 10.1 per cent in 2019. Net profit margin dipped to 0.8 per cent in 2019 as against 2.5 per cent in 2018. However, the group’s debt-to-equity ratio improved from 101.7 per cent in 2018 to 84.1 per cent in 2019. Also, Flour Mills’ net asset per share stood at N36.80, almost a triple of its current market valuation.

In a statement, the group expressed optimism that it will witness continuous growth in key segments of its food and agro-allied businesses in the new business year, noting that targeted strategies are expected to deliver improved margins and operational efficiencies.

According to the company, continuous implementation of turnaround initiatives in the agro-allied business, accelerated expansion in the business-to-customer segment, optimal operation of its supply chain and further balance sheet management are expected to result in higher profitability.

The group noted that it undertook series of strategic actions designed to improve returns and deliver maximum gains for its investors in 2018 including the restructuring process that saw all its businesses in the agriculture sector aligned under its wholly owned holding company, Golden Fertiliser Company.

The company pointed out that the consolidation of its agricultural businesses has started yielding appreciable contributions to the group in the areas of cost maximisation and improved operational efficiency as the businesses make the most of their competitive advantage and synergies.

The management of the company stated that strong cost control measures put in place during the year supported the company despite the prevailing economic headwinds and harsh operating environment, especially for businesses in the congested Apapa, Lagos axis.

According to the company, it has continued to consolidate its investments in the agriculture sector with a strong focus on innovative and efficient use of resources. As such, the group is resizing and simplifying the operations of some of the farms which form an integral part of its backward integration strategy with a few of the smaller experimental farms being scaled down, while continuing focus on key units.

Group Managing Director, Flour Mills of Nigeria Plc, Paul Gbededo, said the group has made substantial progress as growth and efficiency initiatives across various functions and businesses started to show anticipated gains.

According to him, Flour Mills has undergone several functional and structural changes within the last year, with innovation and focus on customer at the heart of the group’s strategic direction.

“We are positive that we will see even greater achievements in our financials in the following quarters as we continue to focus on value creation for our shareholders,” Gbededo said.

Group Chief Finance Officer, Flour Mills of Nigeria Plc, Anders Kristiansson, noted that the group’s strategy to restructure its balance sheet base and optimise financing costs have started to yield desired results.

He pointed out that in spite of ongoing pressures on consumer disposable income in many target categories; the group has continued to deliver stronger performance.