Flour Mills of Nigeria Plc published its third quarter unaudited result reporting standalone EPS of N2.65 against N0.90 in third quarter of 2023, underpinned by solid revenue growth of 51.1%.
Meanwhile, the nine months 2024 EPS settled at N0.22 against N2.87, impacted by the weak performance in half year 2024.
Revenue grew by 51.1% driven by substantial growth across the Food, Agro-Allied, Sugar and Support services business segments.
Market ànalyst believe the broad-based topline expansion reflects (1) gains from the recently introduced value products, Golden Penny Choco, Golden Penny Jollof Hot Noodles & Cinnamon flavored Chin Chin in the Food segment, (2) a favourable price/volume mix across its product portfolio, and (3) increased investment in its B2C channels.
On a quarter-on-quarter basis, revenue grew by 17.0% with expansion in all business segments Food, Agro-Allied, Sugar and Support services.
Gross margin for the quarter expanded by 123bps to 21.0% against 8.8% in third quarter 2023, as the stronger revenue expansion effectively eased the impact of the higher cost of sales.
The cost pressures stemmed from the pass-through effects of currency devaluation and the high inflationary environment during the period.
However, EBITDA and EBIT margins settled lower at 5.9% and 4.4%, respectively, impacted by increased FX loss of 671.7% to N77.08 billion and operating expenses 9.7%.
Net finance costs increased by 17.1%, following a 24.0% increase in finance costs amid a 646.1% increase in finance income.
Analysts attribute the higher finance costs to the increased loan facilities Flour Mill obtained in the review period.
As of nine months 2024, total borrowings increased by 38.5% to N484.22 billion N349.69 billion in 2023 financial year.
Overall, third quarter 2024, standalone profit before tax grew by 29.6% to N8.52 billion compared to N6.57 billion in third quarter 2023.
Following a tax expense of N261.99 million, profit after tax was N8.26 billion against N4.32 billion in third quarter of 2023.
Market watchers cite the company continuous product innovation and effective route-to-market strategy as the major drivers for continued solid financial performance across the group’s core business segments.
Over the rest of the year, they remain optimistic about the prospects for further topline expansion on (1) increased production capacity, resulting from recent acquisitions of Honeywell Flourmills and Port Harcourt Flourmills, (2) modest price increases, and (3) expanded distribution network.
Nonetheless, analysts believe the company’s performance will be constrained by the sustained impact of higher foreign exchange losses on its net operating income.
