Flour Mills of Nigeria (FMN) Plc has received the most critical and primary statutory approval to begin a massive restructuring that may lead to unbundling of the component businesses and assets of one of the largest conglomerates in the country.
The group also received similar approval to raise up to N200 billion in support of its growth plan and the restructuring.
FMN’s finance costs had jumped by 79.12 per cent to N8.150 billion in the year from N4.55 billion last year; contributing to the marginal increase in profitability recorded during the period.
In a regulatory filing at the weekend, the Board of Directors of the group affirmed that it has received shareholders’approval to undertake certain restructuring of the group’s businesses and to raise additional new capital.
The approvals enable the group to remove or separate its manufacturing businesses as well as the power assets of the company.
The regulatory filing was signed by the company’s managing director, Mr. Omoboyede Olusanya and Company Secretary, Joseph Umolu.
While the structure of the emergent company post-unbundling is still sketchy, market analysts said FMN may adopt a holding company structure, which allows it to optimise the potential of each segment of its businesses and assets and reduce substantially the risks of grouped liabilities.
Incorporated in 1960, FMN is a vast food and agro-allied company with operations in flour milling; production of pasta, noodles, edible oil and refined sugar; production of livestock feeds; farming and other agro-allied activities; distribution and sale of fertilizer; manufacturing and marketing of laminated woven polypropylene sacks and flexible packaging materials; operation of Terminals A and B at the Apapa Port; customs clearing, development of real estate properties for rental, forwarding and shipping agents and logistics.
Flour Mills had recently acquired 71.69 per cent stake in Honeywell Flour Mills (HFM) at a total enterprise value of N80 billion. HFM is a separate quoted entity on the Nigerian Exchange (NGX).
Key extracts of the first quarter results of FMN for the three-month period ended June 30, 2022 showed that turnover rose by 45.3% per cent to N339.601 billion in 2022 as against N233.703 billion recorded in comparable period of 2021. The top-line saw appreciable increases in all business segments with the food business rising to N213.166 billion from N146.925 billion while/ the agro-allied business grew to N65.652 billion as against N47.588 billion. Profit after tax however inched up to N5.495 billion in June 2022 from N5.446 billion in June 2021.
FMN’s turnover had hit the N1 trillion mark in the immediate past year ended March 31 2022. The audited report showed that group turnover rose by 51 per cent from N772 billion in 2021 to N1.16 trillion in 2022. Gross profit stood at N108 billion as against N106 billion in the previous year. Profit after tax was almost flat at N7.328 billion in 2022 as against N7.261 billion in 2021.