Flour Mills of Nigeria Plc: Succeeding against competitive odds
Flour Mills of Nigeria is clearly Nigeria’s foremost food business. And in a bid to maintain its market leadership, the Group has aggressively embarked on various expansion and investment strategies thought necessary to keep it at the top of the ladder. The new investment is focused on Flour Mills core business which is food, Agro-Allied and Logistics Support. In each of these sectors FMN is a clear market leader.
The company’s present investment portfolio comprises flour milling, production of pasta, noodles, edible oil and refined sugar, production of livestock feeds, farming and other agro-allied activities, distribution and sale of fertilizer, manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials, operation of terminals A and B at the Apapa Port, custom clearing, forwarding and shipping agency and logistics.
Not until recently when it sold off all its holding, Flour Mills of Nigeria Plc was also a major shareholder in UNICEM, a producer of cement. The Company has in recent years gradually continued to expand its product offerings, shifting base solely from flour to other flour based and agro allied businesses, while also embarking on investments that will create synergies along the value chain. This is in view of the fact that the Nigerian government projects a rapid increase in population, and speculates that the country may witness food shortages in the near future if investment in agriculture is not encouraged.
Analysts have applauded Flour Mills for its investment insights and timely intervention. “We believe that Flour Mills of Nigeria’s strategic investment in large scale commercial farming to support its food processing units with locally produced raw material is well thought out as it will reduce its dependence on imported raw materials and make the company more profitable in the long term as cost will be managed within reasonable limits,” so says a Vetiva Research report.
Even though over the last six years, Flour Mills, like many other companies in Nigeria has been troubled by several factors which include the insurgency in the North, increased competition and the rising cost of production, the Group has been able to deliver consistent top line and bottom line growth, while maintaining its position as market leader in the various sectors its plays in. But its performance has been mainly fueled by a surge in its food business, thus helping to stabilize and drive growth in other aspects of its operations. And despite the price increase in food, Flour Mills revenue was not affected.
Just two months ago, FMN Group posted a profit-after-tax growth of 54.09 per cent in its audited financial result for the year ended March 31, 2018. The company also recommended to shareholders the declaration of a total of N4.10 billion, representing a dividend of N1 per share. The company’s results for the period under review showed that the profit-after-tax appreciated to N13.62 billion from N8.84 billion in 2017, while earnings per share rose by 54.09 per cent to N3.32 from N2.16.
Based on the Operational review, the Food business value chain has been the cornerstone of FMN growth. The Group’s Chief Finance Officer, Mr. Jacques Vauthier, said that the Management of the Company was confident that this sector will record even stronger performance in future. In his words, “to this end, we are enhancing our marketing activities to push the brand’s presence into newer outlets while strengthening present market share”.
In line with that desire, the Group has also pledged to deepen its Agro-Allied section to optimize the growth potential. Mr. Sadiq Usman, Head of FMN Group Corporate Business Development said that for the Agro-allied division, the Group’s focus would remain on developing competences and improving execution capacity to backwardly integrate its core value chains; sugar sweeteners, edible oils, feeds & proteins and cassava starches. He further stated: “the Group will leverage its significant resources and continue to build the capacity of local farmers and farming groups, who are an integral part of our strategy to develop sustainable, locally-focused supply chains.”
As part of a strategic measure to consolidate operations, create value for shareholders and enhance administrative and operating efficiencies, the company in Q2 2017, announced the completion of a merger and absorption of Golden Penny Rice Ltd, a wholly owned subsidiary into Flour Mills of Nigeria Plc. It is expected that the restructuring will meaningfully improve the synergies of the Group, reduce costs and improve the competitiveness of the company’s products, with the aim of advancing the profitability of the Group.
Still in pursuit of market share growth, the company has also made major investment in its subsidiaries to help them optimize production, while also establishing new subsidiaries to strengthen its advantage over competition. One of the new subsidiaries is the Sunti Golden Sugar Estate, which was commissioned on March 15 by President Muhammadu Buhari. Sunti Golden Sugar Estate, located on the banks of River Niger in Mokwa, Niger state is Flour Mills’ biggest agricultural investment in Nigeria. The sugar estate features 17,000 hectares of irrigable farmland and a Sugar mill that processes 4,500 metric tonnes of sugarcane per day.
Enclosed within a 35-kilometre dyke, the production facility area is 15,100 hectares, with a cane area that features a maximum output of 10, 000 hectares. The dyke provides flood protection from the River Niger. Over N1 billion was invested in the state-of-the-art irrigation system that will ensure the efficient cultivation of sugar cane, with infrastructure that includes drain pumps, pump stations, and a power grid, according to a release.
The project illustrates Flour Mills resolve to help drive Federal Government’s desire to reduce sugar importation, save billions in foreign exchange, boost local capacity, and reduce unemployment by putting thousands of Nigerians to work. It also underlines FMN Group’s mantra, which is “Feeding the Nation, every day,” which is at the heart of the Group’s investment activities.
RECOMMENDED ARTICLES
Comment
No comments found.