When the shareholders of Flour Mills of Nigeria Plc (FMN) meet this week at the company’s annual general meeting (AGM), no doubt they will be pleased as the company primes its operations to sustain industry leadership position. For instance, the group has consolidated and expanded its market leadership and diversified its products.
Flour Mills was incorporated over 60 years ago and the company was incorporated as a Private Limited Company in 1960 which was later converted into a Plc in 1978. FMN celebrated its 60th anniversary on the 29th of September 2020 which coincided with the issuance of the Series 4 Bond and the 60th anniversary of the Federal Republic of Nigeria.
Since the incorporation of Flour Mills, the company has remained Nigeria’s largest and oldest integrated agro-allied business with a broad profile and robust Pan-Africa distribution network.
FMN Group is continuously exploring opportunities for strategic partnerships to further enhance its competitive positioning in its main lines of business in Nigeria and to one day extend its business activities beyond the borders of the home market.
In spite of prevailing economic headwinds, the Board is optimistic that FMN has a bright, robust and prosperous future and it continues to demonstrate its commitment to Feeding the Nation, everyday.
Flour Mills Of Nigeria Plc audited financials for the year ended March 31, 2021 shows record improvement in organic sales growth and profitability. Flour Mills of Nigeria Plc demonstrated a strong performance and resilience in a challenging year to capture first signs of economic recovery with accelerated fourth-quarter (Q4) growth versus last year (Q4’21 versus Q4’20: Revenue +44percent, EBT +158percent and PAT +211percent).
The Group delivered impressive full year (FY) top-line growth across all business segments with an average revenue growth of 34percent, led by growth in Agro-allied combined with investments in route-to-market and accelerated expansion in the B2C segments.
Read also: Flour Mills declares N6.8bn final dividend as H1 profit jumps 90%
Profit After Tax reached N25.7 billion, up from N11.4 billion in 2019/2020 (127percent YoY Growth). Flour Mills leadership is consistently focused on strong discipline in operational and capital efficiency by increasing local content in group-wide supply chains and supporting backward integration programs across all value chains.
Based on the performance, the board proposed a dividend of 165 kobo per share up from 140 kobo per share last year, underlining its consistency as one of the most reliable companies when it comes to dividend payment. This attribute has also over the years made the company an investor’s delight.
The Group has continued to pursue strategic business opportunities, such as capacity expansion and realignment of its core food business whilst backwardly integrating in order to further mitigate reliance on imports and exposure to external volatility in the food business by increasing local content in a substantive and sustainable way.
Flour Mills invests in production capacity and looks for import institutions as well as driving local sourcing of raw materials. As a result of these initiatives, the company’s market share has increased and new products have been received positively by the market.
The Group’s backward integration programme has been expanded across all value chains, including strategic partnerships with smallholder farmers, resulting in an average revenue gain of 34percent across all business sectors.
The FMN Group recorded organic growth as a result of continuing product innovation and market transformation, as well as enhanced operational efficiencies. New product options, including Amazing Day, Auntie B Spaghetti Slim, Spaghetti, as well as new SKUs were introduced to the market to further strengthen Golden Penny’s brand presence in target markets.
The Group also made significant progress in the year under review with a robust Route to Consumer strategy. As expected, this has stimulated both volume and distribution growth in the core categories of Pasta, Ball Food, and Noodles, as well as for the development of new categories such as oils and fats and consumer sugar.
The company’s subsidiary, Golden Sugar also increased its investment in sugar self-sufficiency and was recently Awarded ISO 50001 for Energy Management. Golden Sugar Company, the most productive in the Federal Government’s backward integration on sugar, was awarded the ISO 50001 Energy management systems certification by the International Organization for Standardization (ISO). This will lead to further cost-cutting efficiency in sugar production.
Companies that adopt ISO 50001 do not only yield benefits from the energy savings but also showcase environmental responsibility to corporate customers in line with the UN sustainability goals. The Group also assisted its distributors in expanding their business through training and seminars, negotiating favourable financing terms with funding partners, and more.
Within the Agro-allied space, FMN Group maintained its focus on local content by increasing backward integration investments and strategic collaborations across all value chains. To facilitate the aggregation of raw materials from a network of smallholder farmers and young entrepreneurs, FMN continued to invest in their capacities by providing enabling structures such as training and related extension services. For instance, the Starch business continues to advance its backward integration initiatives, with farmlands in Ogun State being created to supply cassava via an aggregator-in-grower scheme. While expansion of blending facilities and distribution hubs, as well as geographic expansion into northern and eastern markets, provide support to the Group’s Fertilizer business’s growth strategy.
In the reporting period, FMN successfully issued N30billion corporate bond with tenor of 5 and 7 years at 5.50percent and 6.25percent respectively as part of its ongoing programme to replace expensive short-term facilities. The FMN Group ultimately remained focused on operational efficiency throughout the previous financial year, with accelerated plans for cost optimization across the organization to ensure competitive product offers and profitability in the changing operating environment.
The company’s food business also recorded exponential organic growth, driven by constant product innovation and transformation in new markets, as well as operational efficiency through route-to-market investments in digitisation leading to sales force optimisation, customer payment system upgrade, automated work flow geared towards customer service and service delivery and rapid expansion in the B2C sectors.
By implementing the overarching long-term plan and maintaining focused on local content and value additions, the Group stays guided by its purpose to ‘Feed the Nation Everyday’ through the 5 primary value chains of grains, oils and fats, proteins, sweeteners, and starch.
FMN has successfully raised funds from the capital market and the Group’s credit rating has improved considerably. The operational financing has also improved till date. The company has continued to deleverage and replaced short term financing with longer tenured lower price funding to optimize capital structure and reduce financing cost
The years 2020 and 2021 are peculiar in many respects. For one, the economic and social disruptions caused by COVID-19 have been devastating on a global scale. Even now, the impact is being felt by millions of families, businesses, and communities.
As part of FMN critical response plan for the pandemic, the Group supported the Nigerian Government through the Nigerian Private Sector Coalition Against Coronavirus (CACOVID), by donating N1billion to the Central Bank of Nigeria (CBN). In addition to the cash donation, FMN also procured $1.5million worth of medical equipment including COVID-19 test kits, ventilators, personal protective gear (N95 masks, coveralls, protective gloves, and protective eyewear) to aid the courageous healthcare professionals on the front line.
FMN also provided essential food products as part of relief efforts to provide support to the most vulnerable in society. Over N400million worth of FMN Plc’s Golden Penny food products were donated to several state governments across the country. To ensure that the Group continues to cater to millions of Nigerian families who depend on FMN for nourishment, especially during the period of the outbreak, FMN instituted a Strategic Business Continuity Framework and a Crisis Management Plan to ensure that its supply chains and production processes were not hindered, while providing safe and healthy working conditions for its employees.
FMN is passionate about feeding the nation everyday. With this interest, the company has maintained a rich tradition of enhancing the quality of living for Nigerian families by producing wholesome quality food options with the company’s iconic brand, Golden Penny. FMN has invested more than N150 billion over the past ten years to execute its core business strategy of aiding the agricultural sector. This investment has been made primarily in agriculture and infrastructure.
