October 27, 2023/CSL Research
Flour Mills Nigeria Plc. (FLOURMILL) Revenue appreciated by 33.9% y/y to N946.65bn in H1 2024 from N720.57bn in H1 2023. On a quarterly basis, the company’s Revenue grew 11.4% q/q to N508.27bn in Q2 2024 from N456.38bn in Q1 2024. Growth in the food, sugar and support services segments to N653.48bn, N149.21bn and N18.72bn from N445.67bn, N104.66bn and N16.34bn in H1 2023 were the drivers of the company’s revenue performance. However, the Agro Allied segment was down 6.9% to N143.24bn in the period from N153.90bn in H1 2023.
The company’s Gross Profit Margin increased by 1.1ppts to 12.4% in H1 2024 driven by growth in Gross Profit to N119.45bn (+47.12% y/y) from N81.19bn in H1 2023 whilst its Cost of Sales (ex-depreciation) also advanced by 32.19% y/y to N845.20bn in H1 2024 from N639.39bn in H1 2023.
Operating Expenses (adjusted for depreciation) remained elevated as Administrative Expenses (adjusted for depreciation) grew by 43.22% y/y to N22.58bn in H1 2024 from N15.76bn in H1 2023. The Selling & Distribution Expenses (adjusted for depreciation) also increased by 52.25% y/y to N10.91bn in H1 2024 from N7.16bn in H1 2023. Flourmill recorded a growth of 12.3% y/y in its Depreciation & Amortisation to N17.42bn from N15.51bn in H1 2023. Earnings Before Interest and Tax (EBIT) settled at N24.70bn in H1 2024 from N30.33bn in H1 2023.
The adverse effect of the FX policies resulted in a spike in the Net finance cost to N32.84bn (+49.64% y/y) in H1 2024 from N21.94bn in H1 2023. The company reported foreign exchange loss of N51.22bn from N19.74bn in H1 2023. Consequently, the company reported a Loss Before Tax of N8.14bn whilst after the tax expenses of N384m, Flourmill’s Loss After Tax settled at N8.52bn in H1 2024. On a q/q basis, the company’s Finance income surged in Q2 2024 to N1.60bn from N168m in Q2 2023 which resulted in a tempered down Net Finance Cost. This brought the company’s Profit Before Tax and Profit After Tax to N1.2bn and N816m respectively in Q2 2023.
We maintain our price target of N36.36/s with a Buy recommendation. Current Price: N29.00/s.
Flourmills H1 2024 (Nm)
Source: Company data, CSL Research |
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Flourmill H1 2024 Quick Take.pdf
