Flour Mills Nigeria Plc. (FLOURMILL) released its Q1 2024 (3M ending 30-June- 2023) earnings result wherein its Revenue advanced by 34.4% y/y to N456.38bn from N339.60bn in Q1 2023 (3M ended 30-June-2022). This was supported by the growth in its revenue segments of food, agro allied, sugar and support services to N303.65bn, N79.86bn, N66.49bn and N6.37bn respectively in Q1 2024. In comparison to the performance in the previous quarter, Flourmill’s Revenue was up 7.2% q/q to N456.38bn in Q1 2023 from N425.69bn in the preceding quarter.
The Cost of Sales increased by 32.6% y/y to N406.08bn in Q1 2024 from N306.35bn in Q1 2023 while Gross profit advanced by 51.3% y/y to N50.30bn from N33.25bn in Q1 2024. Consequently, the Gross Profit Margin was down to 11.00% (-0.9ppts) in Q1 2024 from 12.0% in Q1 2023. Operating Expenses (adjusted for depreciation) remained elevated as Administrative Expenses (adjusted for depreciation) advanced by 28.9% to N11.31bn (Q1 2024) from N8.78bn (Q1 2023). The Selling & Distribution Expenses (adjusted for depreciation) also increased by 28.9% y/y to N5.97bn in Q1 2024 from N4.61bn in Q1 2023. Flourmill recorded growth of 33.7% in its Depreciation & Amortisation to N8.65bn from N6.47bn in Q1 2023. Regardless of the zero-inflow recorded for its Other Income segment, the company’s Earnings Before Interest and Tax (EBIT) settled at N7.12bn in Q1 2024 from N15.29bn in Q1 2023.
Due to FX pressures, Flourmill’s Net Finance Costs grew significantly, up 106.8% y/y to N16.46bn from N7.96bn in Q1 2023 due to the foreign exchange loss of N22.53bn. Inadvertently, Flourmill recorded a Loss Before tax of N9.34bn in Q1 2024 compared with a Profit Before Tax of N7.34bn in Q1 2023 while its Loss After Tax came in at N9.34bn compared with a Profit After Tax of N5.81bn in Q1 2023.
Despite FX losses, we retain our Buy recommendation on Flourmills with a target price N36.36. Current Price: N30.00/s.
