July 2 (Lagos) - Flourmills of Nigeria Plc (
FLOURMILL ) reported full year results ended March 31 2018 that showed sharp increase in profit before tax and after tax.
However the top line sales failed to impress with gain of 3.4% year on year. That's because cost of sales also grew by the 3.5% during the year.
The gain in profit before tax is because of the exchange rate related gains. The company gained N 1.2 billion in 2017 where it lost N 5.7 billion in 2016. If not for this item, there would be no sharp increase in Profit before tax.
FLOURMILL completed their latest rights issue earlier this year as a result the shares outstanding are now above 4 billion units.
So although FMN increased their dividend payout, shareholders will receive one N 1 dividend per unit for the year which is similar to previous year dividend.
Overall this is a disappointing result. Shareholders expected better performance in terms of dividend yield.
The Company claims that the money from rights issue will enable them to invest more in Nigeria but we must remember that this Company does a rights issue frequently. This was the second one in this decade.
Shares of
FLOURMILL are up today to N 32.75 per unit at the time of writing this article. These shares used to trade close to N 100 about five years ago after the last rights issue. Future expectations could drive the stock higher because this is a very large food manufacturing Company but this result is not as good as what shareholders would have liked.
One metric that did impress was the near 50% increase in shareholders funds to N 150.6 billion again a result of rights issue. Overall people are likely to hold this stock into the future on high expectations.
reporting for easykobo.com on Monday, June 2 2018 from Lagos, Nigeria