MON, JAN 29 2024-theGBJournal| Flour Mills of Nigeria Plc, one of Nigeria’s largest food and agro-allied companies, reported revenue growth of 51.1% y/y in Q3-24 (9M-24: +40.0% y/y), driven by substantial growth across the Food (+38.5% y/y), Agro-Allied (+43.1% y/y), Sugar (+115.5% y/y) and Support services (+35.7% y/y) business segments.
The broad-based topline expansion reflects gains from the recently introduced value products – Golden Penny Choco, Golden Penny Jollof Hot Noodles and Cinnamon flavored Chin Chin – in the Food segment, a favourable price/volume mix across its product portfolio, and increased investment in its B2C channels.
On a quarter-on-quarter basis, revenue grew by 17.0% with expansion in all business segments – Food (+10.3% q/q), Agro-Allied (+45.2% q/q), Sugar (+24.2% q/q) and Support services (+13.3% q/q).
Gross margin for the quarter expanded by 123bps y/y to 21.0% (Q3-23: 8.8%), as the stronger revenue expansion (+51.1% y/y) effectively eased the impact of the higher cost of sales (+30.8% y/y).
The cost pressures stemmed from the pass-through effects of currency devaluation and the high inflationary environment during the period.
However, EBITDA (-178bps) and EBIT (-110bps) margins settled lower at 5.9% and 4.4%, respectively, impacted by increased FX loss (+671.7% y/y to N77.08 billion) and operating expenses (+9.7% y/y).
Net finance costs increased by 17.1% y/y, following a 24.0% y/y increase in finance costs amid a 646.1% y/y increase in finance income.
Cordros Research analysts attribute the higher finance costs to the increased loan facilities FLOURMILL obtained in the review period.
As of 9M-24, total borrowings increased by 38.5% YTD to N484.22 billion (2023FY: N349.69 billion).
Overall, Q3-24 standalone PBT grew by 29.6% y/y to N8.52 billion (Q3-23: N6.57 billion). Following a tax expense of N261.99 million, PAT printed N8.26 billion (Q3-23: N4.32 billion).
Meanwhile, Flour Mills reported standalone EPS of N2.65 (Q3-23: NGN0.90) in the period under review, underpinned by solid revenue growth of 51.1% y/y.
The 9M-24 EPS settled at N0.22 (NGN2.87), impacted by the weak performance in H1-24.
Cordros cite FLOURMILL’s 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.
Nonetheless, Cordros believe the company’s performance will be constrained by the sustained impact of higher FX losses on its net operating income.
”Over the rest of the year, we remain optimistic about the prospects for further topline expansion on increased production capacity, resulting from recent acquisitions of Honeywell Flourmills and Port Harcourt Flourmills, modest price increases, and expanded distribution network,” Cordros said.
X-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com|govandbusinessj@gmail.com
