Flour Mills of Nigeria (FMN) Plc, owners of the popular Golden Penny Food brand and one of Nigeria’s leading food and agro-allied companies says it’s optimistic about the growth performance for 2021.
This is despite the impact of COVID-19 pandemic which has dampened the wallet of consumers and pushed Nigeria’s economy into its second recession in less than five years.
“So far, we have had a very strong year and from what we are seeing in the market, that will continue,” Anders Kristiansson – Group CFO – Flour Mills.
According to Kristiansson, the fact the largest and oldest integrated agro-allied business in Nigeria is into essential food production gives it the advantage to report good performance despite a pandemic era.
“I think the advantage that we have is that we are making essential food products and we have made huge investments in the road- to market and value brands,” he said at the company’s recent bond issuance.
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Despite prevailing economic headwinds and the difficult operating terrain of Apapa, Flour Mills of Nigeria, reported strong growth in the year ended March 31 2020.
With the remarkable growth in all three key segments of Food, Agro-allied and Sugar, FMN finished the year strong with a record 184 percent growth in after-tax profit. The highest profit growth rate since 2014.
The last time the Group Company recorded success of that magnitude was in 2016 when it reported a growth in profit after tax of 70 percent.
With a broad basket of food products and robust pan-Nigerian production, distribution, and supply chain network, FMN in 2020 recorded an N7.4 billion or 184 percent increase in Profit After Tax ( PAT), from N4 billion in 2018/2019 to N11.4 billion in 2019/2020. This was almost triple the 72 percent growth recorded for its Profit Before Tax.
Analysis of FMN’S 2020 financial report revealed that its Agro-allied division was a major catalyst in the growth record reported in the review year as the business segment of the company reached profitability. This was largely due to the consistent and focused investments that have been made in its locally sourced segment over the last few years. The management’s strategy has been to continue to stimulate organic growth in all segments of the business.
After ending the year March 31, 2020, on a strong note, the company declared a dividend of N1.40 per share. FMN made the declaration at the company’s 60th Annual General Meeting (AGM) in Lagos where its shareholders voted for the dividend payment.
The dividend of N1.40 per share is 16.67 percentage point higher than the N1.20 that was declared in the previous year. The total dividend of N5.7 billion declared in 2020 is N800 million higher than the N4.9billion that was paid in 2019.
N29.8billion bond listing on NSE
Taking advantage of Nigeria’s current low-interest-rate environment, FMN successfully issued a new N29.8billion Tranche A and Bond, and has thus utilized its N70 billion Bond Issuance Programme registered in 2018.
“We planned to do this listing 9 months later but given the current interest rate we decided to bring the programme forward,” Kristiansson said.
According to him, the funds will primarily refinance some of the company’s long term debt that will be due over the next 18months and it will also give the company the flexibility to continue its expansion program.
Meanwhile, the Senior Unsecured bond listing includes an N4.89 billion under Series 4 Tranche A of the bond issuance programme, at a 5.5percent rate for 5 years, due by 2025, and a N25 billion under Series 4 Tranche B of the same program at a 6.25 percent rate for a tenure of 7 years, due by 2027.
“Flour Mills will continue to explore opportunities to raise funding via the capital market as this enables the company to diversify their funding sources and continue to play a role in the capital market as a significant player in it,” Group Managing Director of FMN, Omoboyede Olusanya, said.
Outlook
According to Ousanya, the company remains passionate about feeding the nation to improve the quality of living for Nigerians through increased production and investments in backward integration.
“The company would continue to explore funding opportunities inherent in the capital market to ensure business growth and continuity,” he said.
With a bright outlook for FMN, the company’s CFO said he sees continuous growth in several segments in the operating year. “We maintain our outlook as stated in our projection as we see continuous growth and opportunities in Nigeria.”
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