January 29, 2024/CSL Research

Flour Mills Nigeria Plc. (Flourmill) has had a steady growth in its turnover with a five year Compounded Annual Growth Rate (CAGR) of 38.4%. In 9M 2024, Flourmill’s revenue grew by 39.97% y/y to N1.56tn in 9M 2024 (ended 31-December-2023) from N1.11tn in 9M 2023 (ended 31-December-2022). On a quarterly basis, Flourmill’s turnover grew to N594.55bn (+16.98% y/y) in Q3 2024 from N508.27bn in Q2 2024. The company’s Gross Profit Margin increased by 5.1ppts to 16.1% in 9M 2024 from 11.0% in 9M 2023 driven by growth in Gross Profit to N251.59bn (+105.54% y/y) from N122.40bn in 9M 2023 whilst its Cost of Sales (ex-depreciation) also advanced by 31.87% y/y to N1.31tn in 9M 2024 from N991.57bn in 9M 2023.

Operating Expenses (adjusted for depreciation) grew to N51.75bn in 9M 2024 from N39.48bn in the same period of the prior year. This growth was largely driven by the Administrative Expenses (adjusted for depreciation), up 25.69% y/y to N34.37bn in 9M 2024 from N27.35bn in 9M 2023. The Selling & Distribution Expenses (adjusted for depreciation) also increased by 43.20% y/y to N17.38bn in 9M 2024 from N12.14bn in 9M 2023.

The company reported an Impairment Loss on its receivables of N2.42bn compared with a writeback of N653m in 9M 2023. Thus, the company’s EBITDA grew marginally to N76.97bn in 9M 2024 from N75.88bn in 9M 2023. After accounting for the growth of 9.2% y/y in its Depreciation & Amortisation to N26.17bn from N23.97bn in 9M 2023, Flourmill’s EBIT settled at N50.80bn in 9M 2024 from N51.91bn in 9M 2023.

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The company’s Finance Income grew to N3.01bn in 9M 2024 from N544m in 9M 2023 while its Finance Expense rose significantly to N53.43bn (+42.50% y/y) from N37.50bn bringing its Net Finance Cost to N50.42bn from N36.96bn in FY 2022. Consequently, Flourmill’s Profit Before Tax declined to N380m (-97.46% y/y), which is a significant downturn compared with the N14.95bn recorded in 9M 2023.

Currently, Flourmill is under review. Current Price: N43.95/s.