31 July 2018 ( Lagos ) Flour Mills of Nigeria Plc released its Q2’18 results (ending 30 June 2018 )today. Sadly, the results are quite disappointing, and all their efforts to reduce their cost of sales and finance costs ( by conducting a rights issue ) were in vain. As the drop in revenue, trickled down the financial results through the profit for the period. 

Their group revenue declined by 10% from N 148.9 billion in the same period in 2017 to N 133 billion in the current period.  Breaking down the segmental contribution in the decline, the Group’s Food business revenue declined by 10%, Group’s Agro-allied segment revenue decline by 9.7%, Group’s Packaging segment revenue decline by 21%, These declines overweighed the 8.5% revenue increase in Group’s Port-operations and logistics and the 200% massive surge in revenue of the Group’s real estate sector. ( All these figures are calculated with respect to the comparable period in 2017, Q2’17 dated 30 June 2018 ) .These upticks reduced the total decline, but weren't strong enough to push it to an increment.

Their Group’s cost of sales also declined from N 131.7 billion in Q2’17 to N 115.7 billion in Q2’18- which is about a 12% decrease. This decrease can be attributed to the reduction in material costs, rent and sales. Consequently, their Group’s gross profit marginally increased by 0.12% to N 17.2 billion in the current period.

But, this is where things went awry, their group’s operating profit dropped by 25% from N 15 billion in Q2’17 to N 11.2 billion in Q2’18. Main culprit was the decrease in net operating gains- breaking it down a little further, it was the reduction in Sundry Income, Loss on disposal of fixed asset and a major foreign exchange loss that caused this huge drop in the operating profit. 

Although they tried to make up these loses by their effective management of their net finance charges, they skyrocketed their finance income by 444% ,by  conducting a rights issue and also reduced their finance costs by 30%. But still, their group’s Profit before tax ( PBT ) dipped by 15% going from N 6.2 billion to N 5.2 billion. Obviously their group’s PAT/ profit for the period took a hit and went down by 19% coming to N 3.6 billion in the current period as compared to N 4.5 billion in Q2’17.

In terms of group’s cash flow, their net changes in working capital dipped by 115% in comparison to Q2’17. While, their net cash flow from operating activities declined by 88%. Making matter worse, their net cash flow loss from investing activities surged by 180%. Although, their cash flow from financing activities did go up by 118%, which increased their Group’s cash and cash equivalents at the end of the period by a whopping 624%. While their group’s trade and other payables also reduced by 32%.

Lastly, in terms of their biological assets, they added N 8.8 million worth of sugarcane and harvested about N 6.1 million worth of livestock and N 68.8 million with of sugarcane.

Reporting for EasyKobo on Tuesday, 31 July 2018 in Lagos, Nigeria