Flour Mills' yearly Profit Takes a Nosedive Due to Massive N138bn FX Loss

Flour Mills of Nigeria Plc posted a dramatic slide in net profit, as much as 88 per cent, for the year ended 31 March 2024, even though the topline grew roughly by half as a high foreign exchange loss weakened earnings.

The food and agro-allied corporation incurred N137.5 billion in foreign exchange loss compared to N31.5 billion a year earlier, its audited accounts released on Monday showed after the naira devaluation increased its cost of servicing foreign loans.

Finance costs for Flour Mills jumped 139.4 per cent to N208.8 billion during the period.

The company, whose activities entail flour milling; pasta, noodles, refined sugar and edible oil manufacturing; distribution & sale of fertiliser; port operations; and real estate development, among others, recorded a revenue of N2.3 trillion in the review period, up by 48.8 per cent.

Selling and distribution costs advanced to N23.6 billion from N15.5 billion as Nigeria’s headline inflation accelerated to a 27-year peak during the year, led by transportation costs. Administrative expenses similarly increased, rising 16.8 per cent.

Flour Mills is in the middle of carving out its bag manufacturing unit BAGCO into a stand-alone subsidiary known as BAGCO Industrial Solutions Limited, having held a court-ordered meeting in May where the restructuring was endorsed. The deal is awaiting regulatory approval at the moment.

Loss before tax for the year under review stood at N236.7 million compared to a profit before tax of N39.8 billion reported for the financial year 2023.

An income tax credit of N3.8 billion helped wipe off the company’s pre-tax loss, taking profit after tax to N3.5 billion. Flour Mills earned N29.5 billion as post-tax profit for the preceding year.

Its total comprehensive income for the year came to N16.6 billion relative to the N31.4 billion posted a year before, boosted by a huge foreign currency translation difference.

Flour Mills is proposing N7.4 billion as dividend payout for the year, a 25.1 per cent drop from the total dividend for 2023, for shareholders to approve at the next annual general meeting. The planned cash reward translates to N1.80 per share.

Currently worth N1.5 trillion in assets, Flour Mills is 63 per cent owned by Excelsior Shipping Company Limited, a Liberia-registered holding company owned by a trust established by the late Greek businessman George S. Coumantaros.