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Dangote Flour Returns to Profitability

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Dangote

One the factors that have endeared the President of Dangote Group, Alhaji Aliko Dangote to invest in the nation’s capital was his decision to list some of the his companies on the Nigerian Stock Exchange (NSE). That decision gave opportunity to investors to share from his wealth through dividends payment. The first company in the Dangote Group to list on the NSE was Dangote Sugar Refinery.

Today there are Dangote Cement Plc, which is the most capitalised on the exchange, Dangote Flour Mills (DFM) Plc and Nascon Allied Industries Plc. These companies have been rewarding shareholders with dividends. However, shareholders in DFM Plc had a raw deal when Dangote Industries Limited (DIL), decided to sell part of that company to South African firm, Tiger Brand in 2012. Soon after the sale, the fortunes of DFM nosedived, leading to accumulated losses. However, in a bid to prevent the company from going under and save several jobs, DIL last December. Months after the re-acquisition from Tiger Brands, Dangote Flour Mills has returned to profitability.

Corporate Profile

Dangote Flour Mills Plc commenced operations in 1999, as a division of Dangote Industries Limited (DIL), one of Nigeria’s largest and fastest growing conglomerates. Following the strategic decision of DIL to unbundle its various operations, DFM was incorporated in 2006. The restructuring was completed in January, 2006 when the Federal High Court sanctioned a scheme of Arrangement wherein all the assets, liabilities and undertakings of the erstwhile flour division of DIL was transferred to DFM.

From an initial installed capacity of 500 MT per day at its Apapa mill, Dangote Flour has expanded rapidly by opening in quick successions three other flour mills in Kano (2000), Calabar (2001) and Ilorin (2005). Each of the mills started with an installed capacity of 500 MT per day but all of them have subsequently expanded resulting in a total installed capacity of 5,000.

The expansion was in response to a growing national demand for flour and flour based products in addition to the company’s drive for increased market share. Thus from a modest beginning the company has grown to become one of the industry leaders within a six-year period. The company has three wholly owned subsidiaries, comprising Dangote Agro Sacks Limited, Dangote Pasta Limited and, Dangote Noodles Limited.

Financial Performance

The company posted a profit before tax (PBT) of N2.64 billion for the nine months ended June 30, 2016, compared to a loss of N9.55 billion posted in the corresponding period of 2015. An analysis of the results showed that Dangote Flour Mills, which consists of Dangote Flour, Dangote Pasta, and Dangote Noodles, recorded a gross profit of N14.03 billion by June 2016 as against N2.62 billion by June 2015. Profit from operating activities rose to N8.47 billion by June 2016 compared with trading loss of N3.48 billion in comparable period of 2015. After tax, net profit stood at N2.84 billion by June 2016 as against net loss of N9.11 billion in 2015. Earnings per share showed 76.5 kobo as against loss per share of N2.42 in 2015.

Gross profit margin more than tripled to 28.14 per cent by June 2016 as against 7.9 per cent in corresponding period of 2015. Pre-tax profit margin stood at 5.3 per cent in 2016, as against negative margin of 28.9 per cent in 2015.

Commenting on the results, Group Chief Executive Officer, Dangote Flour Mills, Thabo Mabe said the return to profitability follows several strategies adopted by the company to increase market share and create value for shareholders. He said that the flour mill is driven by the vision of putting its products on the table of every Nigerian.

Justifying Reacquisition

Although the re-acquisition of DFM attracted various interpretations, sources close to the DIL had said the company had to consider the repurchase so as to keep the it as a going concern, which preserves value for the minority retail shareholders and also secured direct employment for over 3,000 employees.

“Going by every indication, the future of the company was very doubtful and that was risky for the employees which are over 3,000 Nigerians apart from others who benefit from the company’s services through other ancillary services. The return of DIL is therefore a big relief and good decision to save the jobs of the staff of TBCG,” a market source had said.

The transaction ensured that the company was maintained as a viable going concern, able to retain its employees and meet its obligations to its stakeholders.

Besides, the transaction envisaged that sufficient capital will be injected into the company in order to stabilise the business and place it on a sustainable path aimed at creating value for its stakeholders.

Reposition Strategies

Soon after the repurchasing the company, DIL made fresh efforts to reposition the firm, return it to profitability and deliver returns to shareholders like others in the group. The first move was ensuring a new corporate governance strategy. In this regard, Aliko Dangote left the board, while Asue Ighodalo, a renowned corporate lawyer and Chairman of Sterling Bank Plc was appointed as its new chairman.

Also, DIL appointed Alhaji Ahmed Shehu Yakasai as Executive Director, Supply Chain and Deputy Chief Executive Officer, while Ms. Halima Dangote was appointed Executive Director, Commercial.

Addressing the shareholders of the company, Ighodalo assured the shareholders that the Board and Management of the company would continue to mitigate the effect if these challenges and would work extremely hard to turn around the fortunes of the company.

He said following the repurchase of the entire shareholdings of Tiger Brands, additional capital has been injected into the company.

According to him, “We bought back Dangote Flour Mill from Tiger Branded and by this move, it means we have a stronger, better sophisticated and more focused DFM.

“Since the takeover, we have taken a lot steps to reposition the company through expansion to drive growth. We are also using this medium to restate our commitment to increasing our shareholders value and our dear customers.”

He added: “Our processes and management have been strengthened in order to stabilise the business and place it on a sustainable path aimed at creating value for its stakeholders,” Ighodalo said.

The chairman, who expressed appreciation to the staff, noted that the company would continue to place high priority on their training and development, seek and retain the best the “best talents in our continued pursuit of operational and services excellence.”

He stated that the customers are the key partners in the business, who continue to remain the cornerstone of the company.

“Notwithstanding the challenges faced during the year, we continued to receive excellent patronage from our customers. We are immensely grateful for this unwavering support,” the chairman said.

He reiterated the commitments of the group to further invest in the growth of its businesses within and outside Nigeria noting that the Dangote Group believes in job and wealth creation.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

333,000 Artisans: FG Commences One-Time Payment of N30,000

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MSME

FG Begins One-Time Payment of N30,000 to 333,000 Artisans

The Federal Government on Monday said it has commenced a one-time payment of N30,000 to 333,000 artisans under the Micro Small and Medium Enterprises (MSMEs) Survival Fund.

In a statement issued by Laolu Akande, the Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, disbursements were being done to verified beneficiaries of the Artisan Support Scheme.

The statement read in part, “In the first stream of payments starting today, beneficiaries are being drawn from the FCT, Lagos, Ondo, Kaduna, Borno, Kano, Bauchi, Anambra, Abia, Rivers, Plateau and Delta States. They form the first batch of applications for the scheme submitted between October 1 and October 10.

“The MSMEs Survival Fund scheme is a component of the Nigerian Economic Sustainability Plan, NESP, which was developed by an Economic Sustainability Committee established by President Muhammadu Buhari in March 2020.

“The President asked his deputy, Vice President Yemi Osinbajo, SAN, to head the committee which produced and is overseeing the implementation of the plan. “Under the ESP, the Survival Fund is generally designed to among other things, support vulnerable MSMEs in meeting their different obligations and safeguard jobs in the sector.”

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Absorb Exited Npower Beneficiaries, N-power Youths Congress Tells FG

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Absorb Npower Beneficiaries of Batches A and B, N-power Youths Congress Tells FG

The N-power Youths Congress (NYC) has pleaded with the Federal Government to absorb the 500,000 exited Npower beneficiaries of Batches A and B and pay their outstanding allowances.

The National Coordinator, NYC, Comrade Joseph Enam Maga, stated this in Maiduguri during a press briefing held on Saturday at the NUJ Press Center.

He said thousands of exited beneficiaries are yet to be paid since the month of Match.

He, therefore, called on the Federal Government to offset all the outstanding allowances of Batches A and B and create a permanent job for them.

He said “It is a fact undisputable that thousands of beneficiaries have not been paid since the month of March.

“Promises upon promises have been made on this, but yet no positive result has been recorded. Sometimes I wonder what it takes for the data base manager of Npower to rectify this! Something that can be rectified in a couple of hours has lasted for seven good months now.

“Worst still, this is happening within this period of hunger and starvation because of Pandemic. We call on the minister of humanitarian affairs and disaster management to be human enough to respond to our request and give prompt attention to them.

“We equally wish to bring to the notice of Mr. President that Batch B Beneficiaries have not received their devices as was promised and signed at the commencement of the program.

“It is very sad that up to the disengagement of Batch A and B, nobody has come out openly to tell us what happened to our devices.

The coordinator paused to ask why are Nigerian youths being treated like nobody in their country? What have we done to be neglected like this?

“When the Humanitarian Minister was asked why we were disengaged at this critical time in historical epoch that corona virus is terrorizing the whole world, she responded that we were disengaged because it’s a two years programe that we signed.

“Then comes the question: why did Batch A stayed 4years? And if we signed for two years contract that warranted our disengagement, didn’t we equally signed to be given a device that would help us in our different places of primary assignment and equally increase of knowledge? Please we need answers ma. We need answers.

“We, the 500,000 batches A and B of Npower beneficiaries are calling on our government to respond to our demand. We don’t want to believe that it’s only a state of violence anarchy and doom will make a sane government to listen to her Youth’s grievances.

“Look at the Endsars protest for instance, after many lives have been lost and properties destroyed, our government decided to speak up. Niger delta militants were attended to when they resort to arms.

“The insurgents were given amnesty because of their terrorism. But we the innocent 500,000 graduates have been innocently complaining to our government but they paid deaf ears. We are law abiding citizens and we will continue to be law abiding citizens.

“We want Mr. President to understand that a hungry man is an angry man. We have really endured a lot. We need a quick response to our requests. We can’t be used and dumped like refuse. We refused to be used and dumped”, the National Coordinator added.

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Airtel Africa Appoints Ms. Kelly Bayer Rosmarin as a Non-Executive Director

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Ms. Kelly Bayer Rosmarin

Airtel Africa has appointed Ms. Kelly Bayer Rosmarin as a non-executive director, effective from 27 October 2020.

In a statement released on the Nigerian Stock Exchange’s website, the telecommunication giant said Ms. Bayer Rosmarin’s “appointment is by nomination of the controlling shareholder pursuant to the terms of relationship agreement dated 17 June 2019 between the Company, Bharti Airtel, Airtel Africa Mauritius Limited, the majority shareholder and an indirect subsidiary of Bharti Airtel, and Bharti Telecom. Ms. Bayer Rosmarin will replace Arthur Lang who will step down as a non-executive director on the same date.

“Ms. Bayer Rosmarin is currently CEO of Singtel Optus and Consumer Australia. She was previously with Commonwealth Bank of Australia, where she held several senior positions and varied portfolios, before being appointed as Group Executive of Institutional Banking and Markets. Ms Bayer Rosmarin is recognised for leveraging technology, data and analytics to develop leading customer services and experience. Ms. Bayer Rosmarin was named in the Top 10 Businesswomen in Australia and the Top 25 Women in Asia Pacific Finance and holds a variety of Board and advisory responsibilities.

“Ms. Bayer Rosmarin has, since February 2019, served as an Independent non-executive director on the Board of OpenPay, listed on the ASX. She will continue in that role. Openpay is a payments technology company based in Australia.”

Speaking on the change in the company’s director, Sunil Bharti Mittal, Chairman, Airtel, said: “On behalf of the Board, I would like to thank Arthur, who joined the Board in October 2018 and supported the company through its IPO, for his significant contribution to the success of our strategy to build Airtel Africa into a market leading mobile service provider and wish him well for the future.”

He further stated: “I am delighted that Kelly has agreed to join the Airtel Africa Board and we very much look forward to working closely with her”.

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