Flour Mills of Nigeria PLC (FMN) has commenced the sale of its commercial paper sales, seeking to raise up to N30bn in order to finance its short term working capital requirements.
The N30bn is the thirteen and fourteen series of its ₦100.0bn Commercial Paper (“CP”) Programme, with a tenor of 182- Days for the former series and 269-Days for the latter, while their respective effective yields are 6.7500% and 7.7499%.
Discount rates for the two series are 6.5308% and 6.9584%.
The offer opened Thursday, 16 April 2020 and would close Friday, 24 April 2020 (11:00 am) with settlement on Monday, 27 April 2020, said Afrinvest in a note to clients.
Commercial Paper is a money-market security issued by corporates to obtain funds to meet short-term debt obligations and this is usually backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.
Commercial Papers are usually issued for maturities between 15 days to 270 days maximum tenor, including rollover, from the date of issue.
The choice of bonds by Flour Mills is to lengthen the maturity profile of its debt in a low-interest-rate environment, and also reduce refinancing risk of short-dated securities.
The CP programme will help the company strengthen its balance sheet, while it continues to focus on its strategic objective of sustaining its market leadership position within the food and agro allied-space, said FMN in a note published by the Nigerian Stock Exchange (NSE).
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FMN, which has a short term ratings of A2 (GCR) and a long term rating of BBB+ (GCR), said all issuance totaling N7bn under the CP programme are quoted on the FMDQ Exchange.
Flour Mills of Nigeria’s revenue for the nine months ended 31st December 2019 rose 7.9% to N432.47bn from N400.64bn. Cost of Sales increased 6% to N375.64bn from N354.04bn in the same period in 2018, leaving gross profit at N47.82bn from N46.59bn in the same period in 2018.
Selling and distribution expenses jumped 7.9% to N6.4bn from N5.93bn in the same period in 2018, with administrative expenses surging to N17.26bn from N14.93bn in 2018. Net profit increased 3.4% to N8.16bn from N7.89 bn.
Revenue from its Food segment increased 2.9% to N262.09bn from N254.57bn, Agro- allied segment ballooned 19.6% to N81.31bn from N67.96bn. Sugar value chain increased to N67.61bn from N59.96bn, sadly revenue from support services plummeted to N12.45bn from N18.53 bn.
During the period, the group’s expense on advertisement surged to N1.48bn from N1.39bn.
Shares of Flour Mills as of Monday were priced at N21.2 a unit, 7.61% on year-to-date basis compared to doubledigit decline in the broader market.
Flour Mills of Nigeria PLC provides food and agricultural products and services. The Company offers flour, noodles, pastas, oil and spreads, and sugar, as well as feeds, fertilizers, and logistics and support services. Flour Mills of Nigeria serves customers in Nigeria.
