The food and agro-allied businesses of Flour Mills of Nigeria (FMN) contributed 64% and 18%, respectively, to the N1.2 trillion in revenue the Group achieved, according to the audited financial statement for the year ended March 31, 2022, which was made public on Tuesday, May 31.

The Group’s 2022 total revenue increased by 51% over the N772 billion it brought in the 2021.

The food segment gained N749 billion in 2022, a 57% increase from the N478 billion won in 2021. Products in this segment include wheat, pasta, ball food, noodles, and others. In contrast, the agro-allied segment saw a 53% growth in revenue from N139 billion in 2021 to N213 billion.

The food segment saw a 59% increase on a quarterly basis, rising from N134 billion in Q4 2021 to N214 billion in Q4 2022. From N34 billion in Q4 2021 to N56 billion in Q4 2022, agro-allied increased by 66%. The sugar segment had a 40 per cent growth from N34 billion in Q4 2021 to N48 billion in Q4 2022. On the other hand, the support segment increased by 49% from N14 billion in Q4 2021 to N20 billion in Q4 2022. From N216 billion in Q4 2021 to N339 billion in Q4 2022, these represented a 57% shift in revenue.

The outcome also revealed that the Group’s profit before taxes increased by 11%, from N37 billion in 2021 to N41 billion in 2022, and that its quarterly profit increased by 13%, from N14 billion in Q4 2021 to N16 billion in Q4 2022.

Profit before taxes for the food category rose by 30% to N21 billion in 2022 from N16 billion in 2021, and it increased by 45% on a quarterly basis from N7 billion in Q4 2021 to N11 billion in Q4 2022. After gaining N9 billion in 2022 from nothing in Q4 2021, the agro-allied industry had a 127% rise from N9 billion in 2021 to N19 billion in 2022, but it lost 3,550 percent on a quarterly basis. Having gained N10 billion in 2021 and lost N3 billion in 2021, the sugar segment lost by 133%.

The division lost N4 billion in Q4 2022 after making N3 billion in Q4 2021, a 241% q/q loss. “The segment’s operating performance was largely impacted by the rise in raw material cost,” the Group said in remarks. The support segment experienced a 93% quarterly loss after making N4 billion in Q4 2022 and N0 in Q4 2021, however it generated a 40% profit before taxes from N3 billion in 2021 to N4 billion in 2022.

The food, agro-allied, sugar, and support segments each contributed 50%, 47%, 8%, and 10%, respectively, to the N41 billion profit before taxes that the business reported year over year.

The Group commented on the gains for the food segment and stated that the N270 billion profit in 2022 was primarily driven by: “Demanding volume in the economy/value pack segment; continued deepening of the B2C redistribution infrastructure drive with investments and roll out of 226 vans to enhance penetration of new/smaller SKUs and increased rural penetration through the deployment of containers, tricycles, and POS deployment; growth in core B2C categories: noodles and ball foods (Semo and Goldenvita);” and “increased B2B volume contribution with most lines recording double digit growth;”

The Group claimed that the 58 percent revenue gain in 2022 for the agro-allied segment was the result of installing a seed cleaning factory and implementing a cost-savings program to lessen the frequency of machine breakdowns in production. The animal feed industry had a 49% gain in sales, mostly as a result of expenditures in logistics infrastructure and new product development. A new blending factory in Kaduna State helped the fertilizer industry flourish, adding 89% and 21%, respectively, to revenue and volume growth.

The Group’s support division had rise in revenue and profit, which was explained by “increasing focus on RTM for our innovative products like Zero Fly; increased demand for locally produced packaging material; and a focus on high value products.”

“ABTL, the port facilities division, had strong performance, with revenue growing by double digits and PBT growing by triple digits. This was driven by attention on maintenance, partnerships and improved ties with regulatory bodies. Golden Transport Company’s transportation logistics division saw a 25% year-over-year gain in revenue, mostly from increased cargo volume carried as a result of the loading plan’s strategic planning and the purchase of new vehicles.

The Group saw a 19% gross loss q/q from N34 billion in Q4 2021 to N28 billion in Q4 2022 while only gaining a 1% gross profit y-o-y from N107 billion in 2021 to N108 billion in 2022, despite a 26% increase in operating profit from N52 billion in 2021 to N66 billion in 2022 and a 48% increase q/q from N17 billion in Q4 2021 to N25 billion in Q4 2022.

Its return on equity continued to reflect the negative mood, declining by 3% year over year from N16 billion in 2021 to N15 billion in 2022. It kept a three percent deficit for Q4 2021 and Q4 2022 at N6 billion on a quarter-by-quarter basis.

Additionally, the Group raised its capital source from N368 billion in 2021 to N417 billion in 2022, a 13% increase. Lease liabilities (N18 billion from N17 billion), non-controlling interest (N9 billion from N6 billion), equity and reserves (N187 billion from N168 billion), borrowings (N159 billion from N133 billion), and other sources (N45 billion from N44 billion) were the sources of capital.

PPE (N227 billion from N209 billion), right of use of assets (N16 billion from N17 billion), working capital (N131 billion from N92 billion), others (N12 billion from N13 billion), and cash (N32 billion from N37 billion) were the results about its use of capital that were displayed.

Additionally, the Group’s net debt increased by N31 billion between 2021 and 2022, from N96 billion to N127 billion. After recording net debt of N131 billion in 2018, N110 billion in 2019, N83 billion in 2020, and N96 billion in 2021, the Group’s 2022 net debt reached N100 billion since 2020.

Subsequent investigation revealed that 72% of the net debt in 2022 was long-term debt and 28% was short-term debt. Twenty-three percent was short-term debt and seventy-seven percent was long-term debt as of 2021.

In line with its goal to “Feed the nation, everyday,” FMN has broadened its purview by concluding the acquisition of Honeywell Flour Mills Plc, which will operate under FMN as of May 2022. The deal has an estimated enterprise value of N80 billion and an equity price per share of N4.20. FMN became a dominant stakeholder with 76.75 percent equity interest and operational and managerial control over Honeywell after it bought 5.06 percent equity stake of FBN Holdings and 71.69 percent equity state through its affiliates.

Recall that the Head of Corporate Communications, FMN, Modupe Thani, had remarked that the Group retained the Honeywell brand as a manner of driving market competition and value for its customers.

To ensure sustianability, FMN said it is committed to driving backward integration by sourcing raw materials locally, creating value through a wide range of feeds and proteins product offering, supply chain optimisation and harnessing the opportunity of the African Continental Free Trade Area (AfCFTA).

“FMN maintains an effective supply chain system that improves quality of control, guarantees ongoing improvements, and fortifies our relationships with our partners and suppliers. We have embraced cutting-edge supply chain planning and techniques for various supply chain activities in order to accomplish this.

The statement read, “FMN is dedicated to fostering research and innovation on local content raw materials with the goal of creating a range of local content driven products and reducing dependence on imported raw materials. FMN has implemented its Backward Integration Program (BIP).”

Consistent with its distinct product offering approach, the Group said it developed an Innovation Centre which comprises of inventive staff office, boardroom, analytical laboratory, pilot plant, sensory lab and kitchen to drive process and product innovation while assuring consumer happiness.

FMN, which is present in 11 states in Nigeria’s rural and semi-rural areas, upholds its excellent corporate citizenship by making investments in vital community sectors like infrastructure, health care, and education.

The Group Managing Director of FMN, Omoboyede Olusanya, expressed his satisfaction with the outcome by stating that the Group’s innovation in all of its products and its promotion of backward integration through local sourcing of raw materials were responsible for the accomplishments.

“We are still dedicated to carrying out our long-term strategy, which calls for additional investments in local content through product innovation throughout each of our five core value chains. Given the difficult operating climate over the years, our significant underlying earnings show our dedication to attaining sustainability as we work to realize food security in the nation.

As a result of the acquisition of Honeywell Flour Mills Plc. (HFMF) and the ensuing unique offers, the Group is strategically positioned to take advantage of opportunities presented by the African Continental Free Trade Area (AfCFTA) and expand its portfolio.

“We are making additional progress toward our sustainability goal in keeping with our long-standing commitment to women’s empowerment with the appointment of our third female board member and the promotion of gender diversity throughout our business divisions. Furthermore, we established a board committee focused on nutrition, food security, and local content in order to enhance the welfare of our customers, support the revitalization and fortification of the farming communities involved in our supply chains, and foster regional economic growth.

“We will keep accelerating efforts for cost optimizations across the Group in line with our aim to boost operational efficiency. This will guarantee that, over time, we stay on track to generate wealth for our shareholders, according to Olusanya.