Nigerian companies, especially those in the manufacturing sector, are weathering the storm posed by a myriad of macroeconomic challenges with attendant pressure on their limited resources and attempt to cripple their move towards enhanced capacity utilization.

For instance, Flour mills of Nigeria (FMN) Plc has expanded its backward integration program across all value chains. The Company has continued to invest in backward integration projects as a strategy to diversify and add more value to both its shareholders and the Nigerian economy.

Also, FMN as a company is not only a good dividend stock, it also rewards investors in terms of capital appreciation on the Nigerian Exchange (NGX) Limited and has demonstrated a capacity to reward shareholders over a long period.

Backward integration means local sourcing of raw materials as an import substitution policy. It was a deliberate strategic government policy aimed at conserving foreign exchange, boosting local capacity, creating jobs, enhancing skill acquisition and ensuring that less emphasis is placed on imported raw materials.

FMN Performance In 2021 Year-end

Flour Mills has demonstrated a strong performance for its financial year ended March 31, 2021. Specifically, FMN posted revenue of N771.6 billion for the year, showing an increase of 34.5 per cent compared with the N573.77 billion recorded the previous year. Net finance cost fell from N17.5 billion to N15 billion, resulting from better cost and financial management strategy.

Profit before tax rose by 112 per cent to N37.19 billion from N17.50 billion, while profit after tax (PAT) grew faster by 126 per cent to print at N25.72 billion compared with N11.38 billion the preceding year. Based on the performance, the board has proposed a dividend of 165 kobo per share up from 140 kobo per share last year.

Operational Review

The Group achieved impressive topline growth for the year, aided by gains from our Agro-allied turnaround strategy. Its backward integration program has been expanded across all value chains, including strategic partnerships with smallholder farmers, resulting in an average revenue gain of 34 per cent across all business sectors. Meanwhile, in line with the federal government’s commitment to making Nigeria sugar self-sufficient, Golden Sugar Company, its subsidiary expanded investments in backward integration to engage more sugarcane outgrowers at its Sunti Sugar Estate valued at N64 billion of investment under the Nigeria Sugar Masterplan Plan (NSMP) and also the first and only Greenfield initiative currently producing raw sugar in the country.

Its food business grew organically, driven by constant product innovation and transformation in new markets, as well as operational efficiency through route-to-market investments and rapid expansion in the B2C sectors.

The Company successfully issued N30 billion in corporate notes with tenors of five and seven years at 5.50 per cent and 6.25 per cent, respectively, to replace costly short-term facilities.

Contributing to Nation Development

In one of the most challenging years in recent history, the FMN Group activated a comprehensive response and mobilized considerable resources including a resilient global supply chain to help the federal government manage the impact of the COVID-19 pandemic on the Nation. Also, FMN Group has been enriching lives and empowering communities through its CSR and socio-economic activities. FMN is also supporting local wheat development with a strategic partnership with the Flour Milling Association of Nigeria (FMAN). The group has Aggregated over 800 tons of wheat across 3 states and has provided 493 farmers with mechanized harvesting and threshing services.

Speaking on the result, the Group managing director of FMN, Omoboyede Olusanya, said, “Flour Mills emerges from the prevailing COVID-19 environment as a stronger, more resilient, flexible, and confident business as a result of the collective strategic actions made over our 60-year history. I want to thank all our employees for their patience and hard work as we consistently adapted to the year’s challenges and invested significantly in our purpose of feeding the nation every day.

“FMN is now harvesting the fruits of these efforts and remains committed to braving a continuously uncertain environment with cautious optimism, innovation, portfolio advancement and other strategies outlined in our recent sustainability report.”

Recently at the Company’s ‘Facts behind the Sustainability Reporting’ held on the NGX, Group CEO Nigerian Exchange Group Plc, Mr Oscar Onyema said, “We count it a great success when more companies publish reports on performance on their key environmental, social and governance indicators as well as their commitments to creating a sustainable future.

“We commend the board and executive management of FMN for leading the charge to advance sustainability in the food and agro-allied sector, especially the priority given sustainability by the new management led by Mr Omoboyede Olusanya.”

Onyema added further that the group was pleased that FMN chose to leverage the platform of sustainability reporting series, which is Global Reporting Initiative (GRI) referenced and aligned with sustainability reporting guidelines.

He disclosed that studies have also shown that sustainability reporting influences a company’s performance, as it can serve as a learning process for an organization to better understand and manage its impact on people and the planet, while also managing risks and managing new opportunities and identifying key actions towards creating a sustainable future.

Incorporated on September 29, 1960, as a limited liability company and pioneer wheat miller in Nigeria and 1978 became a public company, with its shares listed on the Nigerian Stock Exchange now Nigerian Exchange Limited. Over the years, the FMN brand grew tremendously from operating as a single business, flour miller, to a vast business group with strategic investments that cover key sectors of the Nigerian economy. The group’s operations can be categorized into four major sectors of Food, Sugar, Agro-allied, and Support services.