Flour Mills of Nigeria Plc HY 2014 financial results presentation

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Flour Mills of Nigeria Plc HY 2014 financial results presentation

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Flour Mills of Nigeria Plc HY 2014 financial results presentation

  1. 1. Flour Mills of Nigeria Plc H1 2013/14 Results Presentation www.fmnplc.com
  2. 2. Food Agro-allied  Branded consumer goods: – Flour – Pasta – Noodles – Semovita – Goldenvita – Sugar – Rice – Edible oils – Snacks – Breakfast cereals  Branded intermediate products: – Bread flour – Biscuit flour – Multi-purpose flour – Sugar – Edible oils  Fertilizer blending/distribution  Domestic cultivation of – Cassava – Sugarcane – Soybean – Maize – Rice – Oil Palm  Processing of – Cassava – Sugarcane – Soybean – Maize – Rice – Oil Palm  Animal feeds  Seed distribution and collection points Other  Bagco  Construction  Unicem (cement)  Supporting infrastructure: – Golden Transport Co – Port – Power FMN at a glance A related portfolio of vertically integrated activities, FMN has been a household name in Nigeria since independence (1960). Today, the Group is publicly-listed with a market cap of ₦200 billion (~$1.3 billion) and sales of ₦ 400 billion (~$2.5 billion) 2 Growth Factors for FMN  Population growing at 2.8% per year – Most populous country in Africa (170 million ) – 41% of the population is below the age of 14 – 55% of the population is between 14 and 64  Growing GDP per capita – GDP growth of 7% for Nigeria in 2013 (F) – Consumers begin to move up-market into value-added flour products like pasta, snacks, and cereals – Rapid urbanization already underway  Continuous increase in demand for food – Shift in consumer patterns and increasing disposable income – Changing consumption habits point to potential growth in demand for FMN products  Increasingly dynamic private sector consisting of local and multi-national companies which are FMN’s current and prospective clients
  3. 3. Northern Nigeria Flour Mills Plc 52.6% Nigerian Eagle Flour Mills Limited 51% Niger Mills Division 100% Golden Pasta Division 100% Golden Transport Co., Ltd 100% Golden Shipping Co., Ltd 100% BAGCO Division 100% Apapa Bulk Terminal Limited 100% Flour Mills Registrars Limited 100% UNICEM 28.15% Food businesses Agro-allied businesses Logistics & Support Other Subsidiaries Thai Farms International Limited 100% Golden Fertilizer Division 100% Group structure 3 Real Estate Holdings 100% Golden Sugar Company Limited 100% Golden Noodles Co., Ltd 100% Premier Feed Mills Co., Ltd 62% Kaboji Farms Limited 100% Rom Oil Mills Ltd 90% Agri-Farms 100% Agri-Palm Ltd 100% Golden Rice Company Ltd 100% Sunti Golden Sugar Est. Ltd 100% IPP (Power) 100%
  4. 4. Over the past 18 months, FMN has evolved through organic growth and strategic acquisitions Recent Activity  Commissioning of 750,000 mtpa sugar refinery in Apapa  Commissioning of Agbara plant for pasta, snacks, powdered drinks and breakfast cereals  Increased investment in West Mills, Niger Mills and Noodles  Successful roll-out of Customer Service Centers (local distribution centres with retail-facing fleet and mobile points-of-sale)  Signing of joint venture technical support agreement with Adecoagro on Kaboji Farms  Upgrade and expansion of Thai Farms International cassava processing facility  Establishment of 10,000 Ha cassava plantation in Kwara State  Acquisition and rehabilitation of 3,000 Ha oil palm plantation and oil mill (Agri-Palm)  Purchase of poultry layer operation in Ibadan  Merger of BAGCO and Niger Mills into FMN plc  Successful additional equity investment of N28.2b via rights issue  Approval to build second line in Unicem, doubling capacity to 5 million mtpa  ISO 9001 accreditation for Apapa Flour, Iganmu Pasta and Bagco operations  Official opening of ‘Golden Penny Place’, the new corporate headquarters in Apapa Recent corporate milestones 4
  5. 5. H1 2013/14 Results  Group revenues grew significantly, up 22.1% y/y  Earnings were impacted by rising input costs. Overall cost of sales rose 27.7%  Selling and distribution expenses also rose during the period, up 92.6% y/y to N3.560bn, due to higher marketing expenses and expanded salesforce  Admin costs have been reduced. They fell 5.8% y/y to N4.989bn  The imputed tax rate for the period fell to 20%, from 26% in the same period last year (Naira 000) 30.9.13 30.9.12 % Change Revenue 167,983,877 137,587,336 22.1 Gross Profit 17,903,579 20,102,940 -10.9 Profit before Tax 7,332,986 10,415,887 -29.6 Profit for the period 5,831,432 7,663,443 -23.9 5
  6. 6. H1 2013/14 Revenues by Segment  The core Food and Agro-allied businesses both experienced volume growth  The Packaging business experienced a challenging environment during the period  Port Operations and “Others” have a tendency towards volatility but represent an almost inconsequential part of the overall business (see following slide)  With the cessation of cement imports, sales from this division represent only legacy business and are of inconsequential size (see following slide) (Naira 000) 30.9.13 30.9.12 % Change Food 119,649,311 102,582,802 16.6 Agro-allied 40,463,457 21,975,026 84.1 Packaging 7,155,995 9,788,627 -26.9 Port Operations 549,983 1,989,081 -72.3 Cement 47,229 898,201 -94.7 Others 117,902 353,599 -66.7 TOTAL 167,983,877 137,587,336 22.1 6
  7. 7. H1 2013/14 Revenues by Segment  Food and Agro-allied jointly represent 95% of group sales  Cement, Port Operations and “Others” each contribute less than 1% of group sales  Cement represented a miniscule fraction of sales. At only 0.7% of sales in H1 of last year, y/y comparisons are no longer significantly distorted by the cessation of this business 71% 0.0% 24% 4% 0.3% 0.1% Food Cement Agro-allied Packaging Port Operations Others 7
  8. 8. H1 2013/14 Profit Before Tax by Segment (Naira 000) 30.9.13 30.9.12 % Change Food 5,915,373 9,051,897 -34.7 Agro-allied 1,288,208 273,195 371.5 Packaging 241,948 1,093,431 -77.9 Port Operations -18,531 264,429 -107.0 Cement -65,645 -219,268 n/a Others -28,366 -47,798 -40.7 TOTAL 7,332,987 10,415,886 -29.6  Increased costs in the Food division resulted in a reduction in the division’s contribution to PBT  The Packaging division also experienced significant pressure  The Agro-allied division had a strong six months compared to last year  Although volatile, the other divisions (Cement, Port Operations and “Others”) have little impact on overall results 8
  9. 9. H1 2013/14 Profit Margins by Segment PBT margin % 30.9.13 30.9.12 Change, bps Food 4.9 8.8 -388 Cement -139.0 -24.4 n/a Agro-allied 3.2 1.2 194 Packaging 3.4 11.2 -779 Port Operations -3.4 13.3 -1666 Others -24.1 -13.5 n/a Total 4.4 7.6 -321 9
  10. 10. H1 2013/14 Cash Flow  Significant increase in cash generated from operating activities  The group continues to make important investments to support long-term growth 10 (Naira 000) 30.9.13 30.9.12 Net Cash generated by Operating Activities 12,947,239 4,760,347 Net Cash used in Investing Activities (21,388,316) (26,184,565) Net Cash generated by Financing Activities (12,211,395) 6,557,398 Net Cash Flow (20,652,472) (14,866,820)
  11. 11. H1 2013/14 Balance Sheet (N 000 000) 30.9.13 30.9.12 31.3.13 Non-Current Assets 186,708 153,217 171,279 Current Assets 99,698 113,679 108,968 Total Assets 286,406 266,896 280,247 Non-Current Liabilities 95,540 87,799 81,827 Current Liabilities 105,912 93,680 114,526 Shareholder’s Equity 84,954 85,417 83,894 11  Increase in fixed assets the result of continuing investment
  12. 12. Food  Own the end point of sale – Increase numerical and value distribution, utilising all major distribution mechanisms (distributor network, sub-dealers and wholesalers, as well as the growing modern supermarket trade) – Support by active consumer education programs and point of sale activities Agro-Allied  Backwardly integrate and expand Premier Feeds – JV development and expansion of Kaboji Farms as backward integration for feed-milling business – Doubling of capacity at Premier Feed Mills and geographic spread into Eastern Nigeria  Ramp up production of new products – Rapid scale-up of the edible oils business in 2014 – Ramp-up cultivation of domestically grown sugarcane, oil palm, cassava, maize, soy beans, and rice – Launching new projects to produce starches and/or glucose syrups from cassava  Roll-out of pan-Nigerian network of hubs for collection of produce, and distribution of seeds and fertilizer Outlook: strategic developments 12
  13. 13. Conclusion  Difficult H1 in the face of rising input costs and challenging environment for the Packaging business  Significant steps have been taken to address and mitigate these issues  The group is generating strong cash-flows from operating activities and is continuing to invest for future growth 13
  14. 14. DISCLAIMER This document is being issued by Flour Mills of Nigeria Plc (“FMN”) and is for private circulation only. The information contained herein does not constitute an offer to sell or the solicitation of any offer to buy any securities and or derivatives and may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of FMN. The information and opinions contained in this document are for background purposes only, and do not purport to be full or complete, nor does this document constitute investment advice.

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