Flour Mills of Nigeria (FMN) Plc has surmounted the foreign exchange revaluation loss headwinds, thanks to strategic price increases in response to high inflationary environment and the introduction of innovative products.
The stellar performance by the miller shows a firm can thrive amid price rises, decrepit infrastructure, and a battered currency given that nearly all consumer goods firms have fallen off the cliff.
The largest miller by market capitalisation posted profit after tax (PAT) of N6.97 billion as at three months ended 30 June 2024 from a loss of N9.33 Billion as at three months ended June 2023.
Spurred by innovative products tailored to meet customers’ needs across the regions, FMN’s sales surged by 67.21 percent to N763.18 billion in the period under review from N456.37 billion the previous year.
From a segment point of view, revenue from Support Department Segment grew the fastest in the period under review by 92.22 percent year on year (YOY), followed by Sugar Unit that rose 68.80 percent year on year (YOY), and Food that was up by 61.62 percent.
Analysts at Chapel Hill Denham in a recent note to clients are of the view that the introduction of the regionally targeted Aunty B and Mai Kwabo toward low income earners will drive sales in 2025 onwards.
Furthermore, the focus on advertisement and campaign is expected to drive the penetration of both existing and new products. We highlighted that investment made in B2C distribution as well as sales structure optimisation is positive for future revenue growth,” said analysts at Chapel Hill Denham Limited.
Because of the positive outlook for FMN, analysts at Chapel Hill Denham have their ratings on the stock from Hold to Buy with an upgraded 12 months target price of N54.22.
“This target price implies a potential return of 20 percent (price return of 15.60 percent and dividend return of 4.4 percent,” said analysts at Chapel Hill Denham.
The company’s shares have gained 39.18 percent so far this year, outperforming the NGXASI index.
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