Flour Mills of Nigeria Posts N9.34bn Loss, Stock Gains 10%
Food producer Flour Mills of Nigeria (FMN) Plc recorded more than N9 billion loss after tax in the first quarter of the company’s 2024 financial year due to naira fluctuation. Despite the loss, the company share rallied with a maximum daily gain of 10% in the stock market.
The company said in its Q1 2024 regulatory filing that its revenue advanced by 34.4% year on year to N456.38 billion from N339.60 billion in the comparable period in 2023. This was supported by the growth in its revenue segments of food, agro-allied, sugar and support services in Q1 2024.
Analysts’ review of the company numbers showed that the food segment recorded N303.65 billion in revenue in the first quarter, and Agro-Allied segment sales surged to N79.86 billion. It raked in N66.49 billion from Sugar sales and N6.37 billion from its support services segment.
In comparison to the performance in the previous quarter, FMN Plc’s revenue was up 7.2% quarter on quarter to N456.38 billion in Q1 2023 from N425.69 billion in the preceding quarter, according to CSL Stockbrokers.
According to the company’s result, costs of sales inched higher by 32.6% year on year to N406.08 billion in Q1 2024 from N306.35 billion in Q1 2023, reflecting inflation condition in its key market – Nigeria.
Meanwhile, the company saw its gross profit advance by 51.3% year on year to N50.30 billion from N33.25 billion in Q1 2024 over better revenue growth. The numbers kept FMN Plc’s gross profit margin down to 11.00% in Q1 2024 from 12.0% in Q1 2023 amidst rising overhead spending.
CSL Stockbrokers said its operating expenses (adjusted for depreciation) remained elevated as administrative expenses advanced by 28.9% to N11.31 billion from N8.78 billion in the comparable period in the 2023 financial accounting year.
In addition, the company’s selling & distribution expenses (adjusted for depreciation) also increased by 28.9% year on year to N5.97 billion in Q1 2024 from N4.61 billion in Q1 2023, CSL Stockbrokers said in a review.
Flourmill recorded growth of 33.7% in its depreciation and amortisation to N8.65 billion from N6.47 billion in Q1 2023. Analysts said regardless of the zero-inflow recorded for its Other Income segment, the company’s earnings before interest and tax settled at N7.12 billion in Q1 2024 from N15.29 billion in Q1 2023.
FMN Plc’s bottom line strength was eroded by a large FX loss that pushed its finance costs higher. Its numbers showed that net finance costs grew significantly, up 106.8% year on year to N16.46 billion from N7.96 billion in Q1 2023.
Analysts attribute the margin dilutive development foreign exchange loss of N22.53 billion. Battered by FX pressures, the food producer recorded a loss before tax of N9.34 billion in Q1 2024 versus the pretax profit of N7.34 billion in Q1 2023.
In the first quarter of 2024, FMN Plc settled down with a loss after tax of N9.34 billion, which was a significant reversal for the company when compared with a profit after tax of N5.81 billion in Q1 2023. In the stock market, the company’s share rose by 10% from N30 to N33 on Tuesday.
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