Honeywell Flour Mills Plc, Northern Nigeria Flour Mills plc and Flour Mills of Nigeria Plc (FMN) have reported dwindling or loss in profit for nine months ended December 31, 2018, Business247News online reports.
The weak corporate earnings by the companies is coming on the heels of increase in cost of sales and sell and administrative expenses as most companies operating in the country battled hike in materials used for production, among others.
For the nine months ended December 31, 2018, Northern Nigeria Flour Mills reported a loss of N169.7 million as against N160 million loss reported in nine months ended December 31, 2017.
The Northern Nigeria Flour Mills, a division of Flour Mills of Nigeria with its manufacturing plant in Kano reported increase in Cost of Sales and Selling expenses that rose by 38per cent and 74.2 per cent respectively, despite improved revenue of about 59.5per cent in the period under review.
For Honeywell Flour Mills, the company reported 95 per cent drop in profit to N143 million in nine months of 2018 from N2.78 billion reported in nine months of 2017.
Honeywell with one per cent increase in revenue, show its Selling expenses gaining 19 per cent to N6.8 billion from N5.7 billion reported in nine months of 2017 while COS also increased by nine per cent to N45.6 billion in nine months of 2018.
In addition, Flour Mills of Nigeria with struggling revenue reported 36.2per cent drop in profit to N10.31 billion from N13.15 billion reported in nine months ended December 31, 2017.
According to the company, “revenue stood at N297 billion for nine months ended December 31, 2018, representing a marginal decline of two per cent, when compared to N304 billion recorded in the same period last year.
“The two per cent in revenue is disappointedly related to the logistic upheavals posed by the traffic challenges in Apapa.”
The company also reported a decline of 18 per cent to N34 billion gross profit compared to N41 billion reported in nine months ended December 31, 2017.
The FMNs’ company reported nearly 10 per cent increase in COS to N264 billion from N262 billion, attributable to power cost and repair & maintenance.
Commenting on the result, the group Managing Director, FMN, Mr. Paul Gbedebo said, the results are largely a reflection of our focus on driving volume growth while improving operational efficiency and ramping up strategic marketing and promotional activities to win over new market segments in our food business.
“Despite the devastating effect of the traffic congestion in Apapa on our operations, we are quite positive that we will see improvements across major business segments before the close of the financial year, as we continue to focus on delivering on our promise of quality to our consumers.”
The company in a statement noted that continued strong sales and brand building focus has ensured a further growth in market share and strengthened the group’s market leader position within the flour market.
The Group has announced its intent to carve out its fertilizer business from Flour Mills of Nigeria and registered same as an independent company to hold its Agro-allied businesses.
This is expected to position this business segment for further growth and ensure optimal financial structures for the related businesses. The holding company will be fully owned by Flour Mills of Nigeria Plc. The arrangement is however subject to the approval of the Securities and Exchange Commission.
Meanwhile, investors on the Nigerian Stock Exchange (NSE) reacted to weak corporate earnings of the above companies in January.
For instance, the share price of Flour Mills dropped by N4.55 or 19.7per cent to N18.55 in January closing of the market from N23.10 it opened for trading this year.
In addition, Northern Nigeria Flour Mills sheds N0.85 or 17.7 per cent to N3.95 from N4.80 while, Honeywell Flour Mill dropped by N0.08 or 6.25 per cent to N1.20 as at January 31`, 2019 from N1.28 it opened for trading this year.