Flour Mills full-year profit drops by 6% Flour Mills full-year profit drops by 6%

Flour Mills of Nigeria Plc posted a full-year profit before tax of N7.72bn, down by six per cent from N8.22bn the previous year. The company’s profit after tax however grew by 57.87 per cent to N8.47bn on the back of what analysts described as a tax credit of N738m and positive surprises of N395m and N542m on the other comprehensive income and minority interest lines. The company’s unaudited results for the year ended March 31, 2015, which it filed with the Nigerian Stock Exchange, showed that its gross earnings fell to N308.76bn in the year to March 31, compared with N325.79bn in the previous year. Flour Mills of Nigeria had last week said it planned to raise N40bn through a rights issue to existing shareholders. It said the plan had been endorsed by the company’s shareholders. The Chairman, Flour Mills, Mr. John Coumantaros, was quoted as saying at an extraordinary general meeting in Lagos that the funds would help the company to reduce its debt burden, lower its interest charges and augment its working capital. Analysts at FBN Capital Limited, while commenting on Four Mills’ results for the three months ended March 31 2015, said the results showed that the PBT improved markedly to N4bn, compared to N624m in the fourth quarter of 2014 due to a one-off gain of N14.2bn on disposal of investments (basically divestments of the FMN’s 15 per cent shares in UNICEM). “Excluding this gain, the FMN would have reported a pretax loss of N10.2bn. Thanks to a tax credit of N1.1bn and a positive contribution of N1.2bn on the minority interest line, PAT grew 59 per cent year-on-year to N6.7bn. “Again, if we strip out the extraordinary gain of N14.2bn from the sale of investments, the company would have reported an after-tax loss of N7.5bn for the quarter (vs. -N10.0bn in Q4 2014). Further up the profit and loss account, although sales declined by six per cent y/y to N64.5bn, gross profits grew by 19 per cent y/y to N13.1bn because of a gross margin expansion of 420bp y/y to 20.2 per cent. “However, excluding one-off gains, the gross margin expansion would have been completely offset by a 59 per cent y/y and 80 per cent y/y rise in interest charges and other operating expenses. “A negative surprise of -N1.1bn on the investment income line would have also weighed heavily on pretax earnings. Sequentially, while sales fell by 18 per cent quarter on quarter, the PBT and PAT of N4.0bn and 6.7bn improved over the –N2.1bn and –N1.3bn that the company reported in Q3 2015 (end-Dec).”