Northern Nigeria Flour Mill grows half-year profit by most in 6years

Northern Nigeria Flour Mill’s half-year financial statement tells a story of recovery as the Kano-based miller recorded its highest profit in six years in the period ended September 30, 2021.

The company grew its profit by 18.72 percent to N173.74 million in the first six months of 2021 from N146.34 million in the comparable period of 2020.

Before 2020 and 2021, the company consecutively recorded a half-year loss from 2017 to 2019, despite making profit in 2016.

The creditable profit growth of the company in the first half of this year can be traced to an 84.56 percent increase in the revenue from its operations to N8.01 billion from N4.34 billion in the previous year.

“Management efforts to reposition the company back to sustainable profitability continue with increase in volumes and revenues within this quarter by strengthening all her products’ presence within the industrial
and consumer markets while exploring new ways of improving margins,” the company explained in its financials.

Another reason for the company’s performance was the N3.33 million earnings from ‘Insurance/Provision no longer required’, which was not gained in the first half of last year.

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Likewise, finance cost dropped by 23.21 percent to N97.79 million in the six month period of 2021 compared to the N127.35 million in the same period, 2020.

A breakdown of the unaudited financial report showed this was mainly due to no payment of dividend compared to the N26.73 million in the same period under review last year.

The company also reported a reduction in Interest on Long Term Loans from 100.62 million in 2020 to N68.45 million.

Cost of sales surged 87.91 percent to N7.38 billion from N3.93 billion in 2021. Despite the surge in sales cost, gross profit rose to N628 million compared to N416 million a year before. This was because the revenue grew higher than the cost of sales.

Further breakdown of the results revealed that the company’s selling and distribution expenses rose by 60.3 percent to N60.16 million compared to N27.52 million in 2020. Administrative expenses also jumped 93.4 percent to N353.01 million from N182.55 million in the period under review last year.

Nonetheless, shares of NNFM remained flat at N8 at the close of trade, 22nd, October. The basic earnings per share stood at 97 kobo per share from 82 kobo per share in the same period
under review last year.

The miller reported cash from operations of N3.89 billion during the first half, according to the statement of cash flow in its financials posted on Nigeria Exchange Group, compared to N602.01 million recorded in 2020.

Much of the difference is due to 226.94 percent increase in trade payable to N4.44 billion from N1.21 billion in the same period, last year.

Ajibola Abiodun, Financial Analyst at MBC Capital, said the increment in trade payable might be a strategy for the company to minimize its borrowings, since the trade payable is a current liability that should be paid
within the year.

“It might be a strategy. Instead of borrowing, the company might have negotiated good terms with their suppliers to pay later, in order to do other things with their money,” he said

In the statement of financial position, NNFM has also greatly reduced its debt load by 47.5 percent. NNFM is now carrying total debt of N597 million compared to N955.67 million, as of Sept. 30, 2020, which is less than
the cash and deposit of N2.74 billion.

Northern Nigeria Flour Mills Limited, formerly Northern Nigeria Flour Mills Plc, is a Nigeria-based company, which is engaged in milling of wheat and other associated grains. NNFM is 47 percent owned by individuals and institutions in Nigeria, and 53 percent owned by Flour Mills of Nigeria Plc., which is the parent Company.