Flour Mills of Nigeria plc, market operator in food and agro-allied products, finished the year strong with record 184 percent profit growth, analysis of its audited 2019/20 financial results shows.
With a growth in all three key segments of Food, Agro-Allied and Sugar businesses, the 60-year-old company reported a Profit After Tax (PAT) increase by N7.4 billion from N4 billion in the full year 2019 to N11.4 billion in 2020.
Analysis of the financial result announced on August 3 shows that the 2020 profit growth rate is the highest the company has recorded in the last six years. Closest to the 184 percent records was in 2016, when it reported a PAT growth of 70 percent.
The Group had a successful year despite prevailing economic headwinds and the difficult operating terrain of Apapa.
In line with management’s strategy to continue to stimulate organic growth in all segments of the business, Flour Mills 2020 financial revealed that its Agro-Allied division reached profitability in 2019/20, and this was behind the consistent and focused investments that have been made in its locally sourced segment over the last few years.
Flour Mills had invested about N95 billion in its agro-allied business. The company in 2016 injected N45 billion in its Sunti Golden, one of only two sugar mills in the country capable of producing crystallised sugar from locally grown sugar cane. This was an addition to the already invested N50 billion in a state-of-the-art sugar refinery in Apapa capable of refining up 2000mt of sugar per day.
“Our PAT nearly tripled from N4 billion last year to N11.4 billion in the current year. This is partly attributable to the improved performance of our Agro-Allied Businesses and in line with our strategy to continue to grow the wealth of our shareholders,” Paul Gbededo, group managing director of Flour Mills, said.
Gbededo said, “The 2019/20 financial year was a remarkable year for our Group and I am pleased with the result.”
Breakdown of the company’s 2019/2020 financial report reveals that the Group’s revenues grew by 9 percent year-on-year (YoY) from N527.4 billion a year ago to N574 billion in 2020.
Meanwhile, the agro-allied arm of the group company contributed the most revenue in the year under review. Revenue from the agro-allied increased by 20 percent from N88.1 billion the previous year to N105.5 billion in 2020.
This was closely followed by the 18 percent growth in the revenue contribution from its Sugar business. From N82.7 billion in the year before, the Sugar arm of the Group increased to N97.6 billion. The Food segment also reported a revenue contribution increase by 7 percent.
According to Gbededo, “The Food business recorded accelerated growths within the business-to-consumer (B2C) segments in line with projections, as our focus to improve customer experience saw the introduction of a range of new products and our strategic marketing and promotional activities to win over new market segments yielded the desired result.”
Flour Mills had in 2019 outlined an ambitious business plan for the next five years with the target to double its business within this period to revenue of over N1.2 trillion in 2024.
The strategy of the business expansion of the company, which has over the years diversified into fast-moving consumer goods, is not only organic growth but acquisitions and partnerships.
Meanwhile, since 2017 when oil-dependent Nigeria emerged from its economic recession, the ability of businesses in Africa’s largest economy to grow their revenue has been poor, especially for consumer goods companies who have continuously reported low sales amid dampening consumers’ purchasing power.
