DANGOTE FLOUR MILLS: PROFIT AND CASH STARVED

Dangote Flour Mills PLC could do with divine intervention this financial to ensure that it ends it outside the loss league and liquid enough to stay healthy. Or so its interim figures to June 2014 indicate so clearly.
More chronic, it seems, is the company's hunger for cash. Despite drawing down receivables 21.8 per cent to N5962.8m from previous N8143.6m and increasing its current liabilities by 38.1 per cent to N51696.1m; Dangote Flour mills still ended June 2015 with working capital deficit that was more than double the level clocked at the same time in 2014. Yet, its trade payables also went up by 14.6 per cent to N13657.2m.
As a result, interest paid rose by 22.3 per cent to N2549.7m while interest received dropped by 48.9 per cent to only N3.13m.
However, Dangote Flour Mills seems desperate for profit too. It ended 2014 financial year with N9285m loss, This was higher than the N6282.3m loss by June of the same year thus implying that the situation grew worse.
Yes, indeed,  declared figures to June 2015 because the loss accumulated in that half came to N9554.4m; a figure which was already higher than the 2014 full year loss.
Dangote Flour Mills had increased its turnover by 15.2 per cent to N33102.5m from N28730.2m although 46 per cent drop in income from other sources total income growth slightly to 15.1 per cent at N33129.3m.
It also scored well in managing direct costs as cost of sale rose by 13 per cent that is, two clear points behind the turnover growth. Unfortunately, distribution and management expenses increased by 17.2 per cent to N6127.7m; and currency valuation loss came to N3523.1m thus landing the company in the loss league even before the higher financial charges came into play.
In the end, as at June 2014, Dangote Flour Mills lost N28.9 on each N100 sale compared to N21.8 by June 2014 and N22.3 for full year 2014.
SO:
* With loss and working capital deficit already well ahead of full year 2014 levels, it will be quite a task for Dangote Flour Mills PLC to end year 2015 in good shape.
* Perhaps, a time may come soon when shareholders may consider injecting more funds if a boost in sales does not manifest to help stabilise the company's liquidity position and profitability.

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