Q3: Flour Mills’ Profit Declines by 13%

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Flour Mills of Nigeria Plc last week announced a profit after tax of N7.055 billion for the third quarter ended December 31, 2011, showing a

Flour Mills of Nigeria Plc last week announced a profit after tax of N7.055 billion for the third quarter ended December 31, 2011, showing a decline of 13 per cent from the N8.106 billion posted in the corresponding period of 2010.

The unaudited results made available by the Nigerian Stock Exchange (NSE), showed that turnover rose by 17 per cent from N122.707 billion in 2010 to N144.162 billion in 2011.

However, profitability fell by 13 per cent as of the leading flour milling firms in the country ended the Q3 with N7.055 billion. Despite the decline in level of profit, the company’s Net Asset Value stood at  N50.26 billion as  at December 31, 2011, up from  N42.063 billion  in March 2011.

Some market operators said  the company would still be able to put smiles on the faces of investors the fall in Q3 profit notwithstanding. According to them, the company has a robust expansion plan that is capable of increasing its fortunes.

Flour Mills of Nigeria recently accessed the capital market to raise about  N28 billion  from existing shareholders through a rights issue.
The Managing Director of   the company, Mr.  Emmanuel  Upkabi, had explained that  the funds would be used for expansion of its businesses.

Specifically, he said that funds would largely be invested in sugar, cement, soya oil, expansion of existing factories and   farms across the country.
“We are expanding our mills; we are investing in our sugar and cement businesses. We are also investing in new businesses.

For example, we have just started new businesses in oil and sugar. We are going to kernel crushing. We would also be crushing soya to get vegetable oil and we may go down stream to make margarine and other products,” Upkabi  had said.

Flour Mills of Nigeria offered 455.566 million ordinary shares of 50 kobo each at N62 per share.

Some  shareholders of the company had expressed their support for right issues, saying they would take up their rights.

For instance, the President, Nigerian Shareholders Solidarity Association, Chief Timothy Adesiyan, said “Flour Mills has a lot of goodwill for Nigerian shareholders because they have been steady.

Their operations have been growing the purses of shareholders. The majority shareholders have already given their consent that they will take up their offer. The shareholders are comfortable with the offer.

According to him, they expect better dividends in future, especially when the new sugar refinery comes into full operations.