WEAK NAIRA DEFLOWERS FLOUR MILLS

The current year ending March 2017 had the potential to end as one of the best in years for Flour Mills of Nigeria PLC but alas, no flowers likely at the end of it all.

According to figures for nine months to December 2016 released recently, the deadly blow that deflowered Flour Mills was a whopping N13.3bn foreign exchange loss that more than doubled the about N6bn similar loss incurred at the same time in previous year.

This loss almost singularly dragged Flour Mills into net loss from non core activities to about N11.8bn from N3.13bn previously.

In the end Flour Mills reported 48% drop in profit before tax to N10.3bn in nine months during which only 26.3% drop in investment income to N726.3m posed real operational threat to the bottom line.

The thing was that Flour Mills had most things under control. Total income rose by 47.8% to N390,670.2m dragged down a little from the 47.9% increase in core revenue to N389,943.7m.

From then on nothing much posed threat because cost of sale growth at 42
6% to N336,448.3m stayed within fair limits and selling and distribution, and administration costs rose by only 11.2% and 12.3% to N4430.8m and N10044.5m respectively.

Then finance charges grew by only 6.97% to N17,696.5m despite near tripling of overdraft to N42,872.6m and 23.6% rise in short term borrowings to N124,629.8m.

In other words, it was the leap in exchange related loss that made Flour Mills close with profit drop.

Thus, Flour Mills settled for 2.63% profit margin as against 7.49% previously.

FLOUR MILLS: Nm 9 months
                2016.         2015
Total inc. 390670.2  264269.5
Core inc.  389943.7  263694.0
Cost of sale 336448.3 235996.1
Distrib.          4430.8.      3984.3
Admin.          10044.5.     8941.3
Net gains.    (11756).     (3127.9)
Invest. Inc.      726.3.        985.5
Finance cost  17696.5.  16542.9
Profit b4 tax  10293.9.  19786.6
Profit margin   2.63          7.49

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