Flour Mills of Nigeria Plc, a Nigeria-based agro-allied group led by Greek businessman John Coumantaros, reported a single-digit increase in profit in the first nine months of its 2022 fiscal year, as rising operating expenses and input costs weighed on earnings growth.
Flour Mills’ profit increased by more than nine percent year-on-year, from N15.58 billion ($37.5 million) to N17.05 billion ($41 million), as the group’s earnings were impacted by a sharp increase in input costs combined with operating rigidity that led to a rise in operating costs.
According to figures contained in the group’s recently released financial results, revenue generated from the sale of its diverse range of products increased by more than 48 percent from N555.3 billion ($1.34 billion) in 2021 to N825 billion ($1.98 billion).
Its food business segment demonstrated increased retail momentum, boosting profitability during the period under review, while revenue growth was driven by 18-percent volume growth alongside sustained demand in the segment.
Flour Mills’ strong revenue growth across its core business segments, according to experts, can be attributed to the company’s continuous product innovation, improved capacity utilization and effective route to market strategies.
The group’s strong operating performance was also aided by an increase in capital expenditure investments from N10 billion ($24.1 million) to N33 billion ($79.4 million).
In addition, the leading agro-allied firm announced plans to increase sugar unit production by investing at least $300 million in the development of a new plant and a 15,000-hectare sugarcane plantation.
Despite double-digit revenue growth, an increase in operating expenses, combined with higher input prices, reduced earnings growth to single digits.
As part of its expansion plans to deliver more value to shareholders and stakeholders, the group installed a new pasta line, completed the construction of a soya plant in Agbara and purchased 60 new trucks during the period under review.
It also announced that its Kaduna Feed Mill, which is nearing completion, will open in May 2022.
Flour Mills Group Managing Director Omoboyede Olusanya stated in response to the financial results that the company will continue to execute its long-term strategy of maintaining growth and sustaining profitability by increasing local content through product innovation across core value chains.
“We will continue to invest in production capacity and make investment decisions that will strategically position the group for the opportunities that will arise from the African Continental Free Trade Agreement,” he said.
As of press time, Jan. 30, shares in Flour Mills Nigeria were trading at a price of N28.55 ($0.0687) per share, 71-basis points higher than their opening price at the beginning of 2022.
At the current price, its market capitalization is valued at N117.07 billion ($281.7 million), while the market value of Coumantaros’s 63.34-percent stake in the agro-allied group is worth N74.15 billion ($178.4 million).
