Flour Mills of Nigeria has posted sales revenue of US$743.26 million for the half year operations ended September 2018, a drop of close to 10% year-on-year.
An impressive growth of 54% in after-tax profit in the last financial year has shifted to a 46% drop in the bottom line at the end of its half-year operations in September 2018.
Based on the expectations of accelerated growth in the second half of the financial year, another moderate growth in sales revenue is projected for Flour Mills at the full year. The food products – flour, pasta, noodles, edible oil and refined sugar, accounting for over 64% of sales revenue, are expected to drive turnover through seasonal sales.
Cost of sales dropped at an equal pace with sales revenue, which enabled the company to defend gross profit margin at 12%.
The challenges came from a 49% growth in selling and distribution expenses to US$ 11.3million and an 18% rise in administrative cost to US$ 27.02million.
The effect of cost increases was extended by a fall of 78% in net operating gains to US$3.02 million resulting to a drop in operating profit to US$ 52.78 million at the end of the period.
A major favourable development is a drop of 31% in finance expenses to US$ 30.81million during the period.
This reflects the company effort in cutting down borrowings from US$420 million at the end of the last financial year to US$390 million at the end of the second quarter.
The food and agro-allied company are however quite hopeful to improve its sales and profits for the second half of the financial year running up to March 2019.
The strength to cut balance sheet debts has come from a new capital injection through rights issue concluded in the last financial year from which it raised over US$110 million.
The new money has given the company increased operational and financial flexibility to take on new opportunities and grow the business, according to its chief financial officer, Mr Jacques Vauthier.
The company earned N1.25 per share at the end of the second quarter, down from N3.17 in the same period in the preceding financial year.