FLOUR MILLS NIGERIA PLC: SWEATING FOR FINANCIERS?

It looks like a major headache in the current financial year for Flour Mills Nigeria PLC is how not to end the year sweating for financiers alone.
Oh sure, according to half year figures to September released recently, profit before tax of N24019.3m was already made by the half year and that should help put smiles on the faces of shareholders come year end March 2016.
But, really the truth is that the bulk (233732.5m) came from gain from sale of investment assets in associates thus masking the little drop of profit from operations within the period.
It was in the second quarter of the year this gain was recorded thus helping Flour Mills to absorb 21.1% increase in finance costs for the half year (up by 32% in the second quarter as a matter of fact).
This apparently resulted from 15.3% rise in term loans from N55260.6m to N63736.6m in spite of 48.4% drop in cash to N16069.4m; 27.6% reduction in other receivables to N4007.2m and 18.7% decrease in trade receivables to N7996.1m from N9836.2m.
The bulk of the cash reaped from all these went into increasing fixed assets by 1.84% to N212790.4m; raising long term debts to the group by 11.4% to N1763.9m; reducing short term loans to N45578.7m and decreasing overdraft by 34% to N39418m.
It was indeed a busy period for managers of Flour Mills liquidity since the group also raised trade payables by 51.1% to N10982.6m and owed 31% more to related companies at N26350.4m.
Hitherto, half year turnover had grown by 7.27% to N177583.2m with the second quarter chipping more than the first one.
But a higher 7.63% increase in cost of goods sold to N159353.6m was recorded thus depressing operating profit  by 1.49% to N12225.9m.
It was from this finance cost 21.1% jump to N12334.4m from N10183.9m was absorbed principally because income from investment dropped by 76.4% to only N485.9m from N2058.5m by September 2014.
SO:
* Much as Flour Mills liquidity managers could smile some more for reducing working capital deficit by 45.5% from N55610m to N30304.7m the struggle not to sweat only for financiers may drag into 2017 year with no more asset sale gains to sustain hopes.
* The situation, f course, could be helped greatly if new assets acquired contribute substantial efficiency and fast too.

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