NIGERIA – Flour Mills of Nigeria PLC has recorded a sluggish operating profit due to a foreign exchange loss of N22.5 billion (US$29M) in the last quarter, giving rise to a loss before tax of N9.3 billion (US$12.09 million) for the first quarter ended June 30.

World Grain, however, reports that the company has recorded impressive revenue, hitting N456.38 billion (US$592M), up from N339.6 billion (US$441M) in the first quarter last year, and gross profits were N50.23 billion (US$65M), up from N33.25 billion (US$43M).

The report also revealed that without the devaluation of the exchange rate, the operating profit would have increased by 52%.

“FMN PLC has experienced continued strong revenue growth with the gross profit growing ahead of revenue,” the company said.

The Food segment, which involves flour milling, and production of pasta and noodles, garnered N303.65 billion in revenue, a significant jump from N213.17 billion year-over-year, but the segment sustained a pretax loss of N11.47 billion, down from a profit of N4.57 billion.

On the other hand, the group’s Agro-Allied business segment showed revenue of N79.86 billion, up from N65.65 billion the previous year.

Profit before tax for the segment, which includes livestock husbandry, production of livestock feeds, sale of fertilizer, edible oil, farming, and other agro-allied activities, was N4.6 billion, up from N2.26 billion. 

Despite the loss in operation profits, the management remains optimistic that with the current government monetary policies at stabilizing the FOREX market, and management’s continuing effort in sales and marketing activities will see significant improvement in profit generation in the coming period.

The company had recorded a gain of N5.812bn in 2022.

The report comes after the recent announcement by the firm to issue up to N55 billion Series 3 Commercial Papers (CP), an unsecured, short-term debt instrument issued by corporations, under its NGN200 billion Commercial Paper Programme.

According to NairametricsFlour Mills had a total external borrowing of about N303 billion (US$403M) as of December 2023 out of which about N52.8 billion are commercial papers and bonds. The company’s debt doubled within a year going from about N148 billion (US$197M) to N303 billion.

Hence, for the current Series 3 CP issuance, the details provided included a tenor of 239 days with a target size of up to N55 billion, a discount rate of 12.4%, an implied yield of 13.5%, and a minimum subscription of N5 million.

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