Flour Mills grows profit by 69% in H1
FLOUR Mills of Nigeria (FMN) Plc recorded significant growths in sales and profitability in the first six months of its current business year with profit before tax rising by 69.3 per cent to N14.61 billion.
Key extracts of the six-month report for the period ended September 30, 2020 released at the Nigerian Stock Exchange (NSE) showed that turnover rose by 31.15 per cent to N355.11 billion as against N270.76 billion recorded in corresponding period of 2019.
Profit before tax rose from N8.63 billion in 2019 to N14.61 billion in 2020. After taxes, net profit also rose by 68.3 per cent from N5.90 billion to N9.93 billion. With these, earnings per share stood at N2.33 by September 2020 as against N1.53 in September 2019.
The latest results reassured on the positive outlook of Nigeria’s largest food and agro-allied group, after well-rounded performance in the immediate past business year.
Audited report and accounts of FMN for the year ended March 31, 2020 had shown considerable improvements in actual and underlying profitability while significant reduction in debts impacted both on the profit and loss accounts and the balance sheet.
Despite 17 per cent increase in dividend payout per share, dividend cover was more than double, a reassurance that was also evident in underlying returns on assets and shareholders’ funds.
Cost of sales rose by 7.2 per cent from N474.06 billion to N507.99 billion. Gross profit thus rose from N53.35 billion to N65.79 billion. pre-tax profit grew by 72 per cent to N17.5 billion in 2020 as against N10.17 billion in 2019. After taxes, net profit jumped by 184 per cent from N4 billion to N11.38 billion. The company increased total dividend payout from N4.92 billion to N5.74 billion, implying a dividend per share of N1.40 in 2020 and N1.20 in 2019.
Underlying profitability ratios improved generally. Gross profit margin improved from 10.1 per cent to 11.5 per cent. Pre-tax profit margin increased from 1.9 per cent to 3.0 per cent. Return on total assets improved from 2.4 per cent to 4.0 per cent. Return on total equity also rose from 2.6 per cent to 7.3 per cent. Dividend cover improved from 0.83 times to 1.82 times.
Group total assets rose by 3.8 per cent from N416.82 billion in 2019 to N432.45 billion in 2020. Current assets had risen by 5.2 per cent from N180.27 billion to N189.73 billion. Total liabilities rose by 4.1 per cent from N265.85 billion to N276.65 billion. While the paid up share capital remained unchanged at N2.05 billion, total equity funds rose by 3.2 per cent from N150.97 billion to N155.81 billion.
With 67 per cent reduction in bank loans, the balance sheet was considerably deleveraged. Debt-to-equity ratio improved from 47 per cent to 15 per cent. The proportion of current liabilities to total assets improved from 44 per cent to 34 per cent while equity funds/total assets ratio was steady at 36 per cent in 2020 as against 36.2 per cent in 2019.
Source: The Nation