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Flour Mills of Nigeria Plc (FMN) Reports Robust Growth in Q3 2023/2024, Driven by Consumer Food Segment

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flour mills posts 184% increase in PAT

Flour Mills of Nigeria Plc (FMN) grew profit before tax by 29% to N8.5 billion in the third quarter (q3) ended December 31, 2023.

According to the company’s unaudited financial statement obtained by Investors King, the growth was fueled by strong performance in the consumer food segment and driven by the affordable regionally targeted brands and the FMN flagship Brand.

Key Highlights

  • FMN saw a strong growth in Q3 driven by investments into the regionally targeted affordable Food brands, providing quality and affordable products to all consumer segments across the nation.
  • YTD Auntie B Pasta, Semovita and Mai Kwabo Pasta volumes grew by 58% vs LY, with the main Golden Penny brand also showing solid growth backed by continuous investments into the consumer value propositions.
  • Gross Profit and Operating Profit improved strongly through mix, operational efficiencies, and pricing, thereby moderating the exchange rate impact in Q3.
  • Profit Before Tax in Q3 rose by 29% to N8.5 billion despite economic volatility.
  • FMN launched a Power Company in Q3, thereby further optimizing its structure and operational efficiencies.

Gross profit increased by 264% to N125.3 billion compared to the equivalent period of prior year.

Profitability also remained resilient, with profit before tax increasing 29% to N8.5 billion despite a volatile macroeconomic climate and foreign exchange headwinds.

FMN recorded standout performance in its largest division, Food, which accounts for over 60% of Group revenue.

Food division sales expanded 39% driven by factors like new product development, optimized distribution channels, and production enhancements.

Strong growth was achieved from the regional targeted affordable brands, Auntie B and MaiKwabo, which registered a 58% volume uplift vs LY. The main national brand, Golden Penny, also witnessed a solid growth. The division continues to drive cost optimization, especially on key raw materials like wheat.

In the Agro-Allied segment, FMN achieved strong growth, led by the resilience of its Animal Feeds business, and increase in Export sales in our Oils and Fats business.

Speaking on the Group’s agile business strategy, Mr. Boye Olusanya, the Group Managing Director/Chief Executive Officer of FMN stated “The success and sustenance of the FMN Brand is a promise made to all our shareholders/stakeholders.

Our collective action as a Group is therefore geared towards keeping this promise. Progressively, we shall continue to boost our global competitiveness and viability to ensure that FMN is positioned to thrive amidst unprecedented environmental changes.

In addition, the launch of the Power Company, will further improve the efficiencies and transform our structure/operations.”

Also commenting on the Group’s viable performance, The Group’s Chief Finance Officer, Anders Kristiansson said “Our consistent execution and growth underscores FMN’s financial and operational resilience.

As we drive more efficiencies across the group, we expect to continue delivering value in line with our long-term strategic plan.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Dangote Refinery Raises Diesel Price to N1,100/Litre Due to Naira-Dollar Crash

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Aliko Dangote - Investors King

Dangote Refinery has announced an increase in the price of Automotive Gas Oil (diesel) from N940 per litre to N1,100 per litre.

This significant adjustment in pricing reflects the refinery’s efforts to mitigate the impact of currency depreciation on its operations.

The decision to raise the price of diesel comes amidst ongoing challenges in the foreign exchange market, with the naira experiencing a downward spiral against the dollar in recent weeks.

The refinery cited the unfavorable exchange rate as the primary driver behind the price hike, signaling the intricacies of operating in a volatile economic environment.

It is worth noting that just a few weeks ago, on April 24, 2024, Dangote Refinery had announced a reduction in the prices of diesel and aviation fuel to N940 per litre and N980 per litre, respectively.

This move was aimed at responding to calls from oil marketers for a reduction in diesel prices, demonstrating the refinery’s willingness to adapt to market dynamics.

However, the recent depreciation of the naira has necessitated a reversal of this downward trend, prompting Dangote Refinery to adjust its pricing strategy accordingly.

Some dealers reported purchasing diesel from the plant at even higher rates, reaching up to N1,200 per litre for those procuring lesser volumes.

Abubakar Maigandi, the National President of the Independent Petroleum Marketers Association of Nigeria, attributed the price increase to the rising exchange rate, as communicated by the refinery.

He emphasized the direct correlation between currency fluctuations and the cost of imported commodities, such as crude oil, which forms the basis for diesel production.

While officials of the refinery have remained tight-lipped on the matter, industry sources and major marketers have corroborated reports of the price adjustment.

Chief Ukadike Chinedu, the National Public Relations Officer of IPMAN, echoed similar sentiments, highlighting the adverse impact of the naira’s depreciation on refined product prices.

The recent fluctuations in the naira-dollar exchange rate underscore the challenges facing Nigeria’s economy, with implications for various sectors, including energy and transportation.

Despite initial signs of stability earlier in the year, the naira’s recent depreciation has reignited concerns about inflationary pressures and economic uncertainty.

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NNPC E&P Ltd and NOSL Begin Oil Production at OML 13, Akwa Ibom State

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NNPC - Investors King

NNPC Exploration and Production Limited (NNPC E&P Ltd) and Natural Oilfield Services Limited (NOSL) have commenced oil production at Oil Mining Lease 13 (OML 13) located in Akwa Ibom State.

The announcement came through a statement signed by Olufemi Soneye, the spokesperson of NNPC E&P Ltd, highlighting the collaborative effort between the flagship upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC) and NOSL, a subsidiary of Sterling Oil Exploration & Energy Production Company Limited.

The production, which officially began on May 6, 2024, saw an initial output of 6,000 barrels of oil. The partners aim to ramp up production to 40,000 barrels per day by May 27, 2024, reflecting their commitment to enhancing Nigeria’s crude oil production capacity.

Soneye said the first oil flow from OML 13 shows the dedication of NNPC E&P Ltd and NOSL to drive growth and development in Nigeria’s oil and gas sector.

He stated, “The achievement does not only signify the culmination of rigorous planning and execution by the teams involved but also represents a new era of economic empowerment and development opportunities for the host communities.”

For Nigeria, the commencement of oil production at OML 13 holds immense significance. It contributes to the country’s efforts to increase its oil production capacity, essential for meeting domestic energy needs and driving economic growth.

Moreover, Soneye reiterated NNPC E&P Ltd and NOSL’s commitment to operating in a safe, environmentally responsible, and community-beneficial manner.

This partnership underscores their dedication to sustainable practices and fostering positive impacts in the local communities where they operate.

The commencement of oil production at OML 13 marks a pivotal moment in Nigeria’s oil and gas industry, signifying not only increased production capacity but also the collaborative efforts between industry players to drive growth and development in the nation’s vital energy sector.

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Manufacturers Grapple with Losses Amid Economic Strain

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canada manufacturing

In the first three months of 2024, some of Nigeria’s major manufacturers found themselves navigating treacherous waters as financial losses mounted amidst economic turbulence.

According to data compiled by BusinessDay, rising interest rates and a further devaluation of the naira contributed to the woes of these industrial giants.

The latest financial reports from 13 listed consumer goods firms paint a grim picture, with seven of them collectively recording a staggering loss of N388.6 billion in Q1.

Names such as International Breweries Plc, Cadbury Nigeria Plc, and Nigerian Breweries Plc were among those that bore the brunt of the downturn.

On the flip side, a few companies managed to buck the trend. BUA Foods Plc, Unilever Nigeria Plc, and Dangote Cement Plc reported a combined profit of N171.9 billion, showcasing resilience amidst the challenging economic landscape.

While the overall revenue of these manufacturers saw an impressive 79 percent increase to N2.27 trillion, it was overshadowed by soaring financing costs.

In Q1 alone, finance costs skyrocketed to N616.5 billion from N65.8 billion in the same period in 2023.

Analysts attribute these mounting losses to the confluence of factors, including the devaluation of the naira and escalating interest rates. With the naira experiencing nearly a 30 percent devaluation this year alone, coupled with a 40 percent devaluation last June, companies faced intensified pressure on their margins.

Moreover, the Central Bank of Nigeria’s decision to raise the monetary policy rate to 24.75 percent in March further exacerbated the situation.

This marked the second consecutive increase, following a 400 basis points hike in February, aimed at curbing inflation.

The adverse effects of these economic headwinds were felt across various sectors. Nestle reported the highest finance cost of N218.8 billion, followed closely by Dangote Cement and Dangote Sugar Refinery.

Commenting on the challenging business environment, Uaboi Agbebaku, the company secretary at Nigerian Breweries, highlighted how increased interest rates and FX volatility led to a staggering 391 percent rise in net losses compared to the same quarter in 2023.

Looking ahead, manufacturers remain cautiously optimistic but vigilant. Thabo Mabe, managing director at NASCON, emphasized the importance of navigating the turbulent waters while executing robust strategies to ensure sustained growth.

As Nigeria grapples with economic uncertainties, the resilience of its manufacturing sector will play a pivotal role in shaping the nation’s economic trajectory.

However, concerted efforts from both the public and private sectors will be needed to steer the industry towards stability and growth.

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