Flour Mills of Nigeria Plc H1 2013/14 Results Presentation

Transcription

1 Flour Mills of Nigeria Plc H1 2013/14 Results Presentation

2 FMN at a glance Food 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 Bagco Construction Unicem (cement) Other Agro-allied 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 Supporting infrastructure: Golden Transport Co Port Power 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) 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 2

3 Group structure UNICEM 28.15% Northern Nigeria Flour Mills Plc 52.6% Niger Mills Division Premier Feed Mills Co., Ltd 62% Thai Farms International Limited BAGCO Division Golden Transport Co., Ltd Nigerian Eagle Flour Mills Limited 51% Golden Pasta Division Kaboji Farms Limited Golden Fertilizer Division Apapa Bulk Terminal Limited Golden Shipping Co., Ltd Golden Sugar Company Limited Golden Noodles Co., Ltd Rom Oil Mills Ltd 90% Agri-Farms Real Estate Holdings Flour Mills Registrars Limited Food businesses Agro-allied businesses Agri-Palm Ltd Golden Rice Company Ltd IPP (Power) Logistics & Support Other Subsidiaries Sunti Golden Sugar Est. Ltd 3

4 Recent corporate milestones 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 4

5 H1 2013/14 Results (Naira 000) % Change Revenue 167,983, ,587, Gross Profit 17,903,579 20,102, Profit before Tax 7,332,986 10,415, Profit for the period 5,831,432 7,663, 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 5

6 H1 2013/14 Revenues by Segment (Naira 000) % Change Food 119,649, ,582, Agro-allied 40,463,457 21,975, Packaging 7,155,995 9,788, Port Operations 549,983 1,989, Cement 47, , Others 117, , TOTAL 167,983, ,587, 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) 6

7 H1 2013/14 Revenues by Segment 0.3% 0.1% 4% 24% Food and Agro-allied jointly represent 95% of group sales Cement, Port Operations and Others each contribute less than 1% of group sales 0.0% 71% 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 Food Cement Agro-allied Packaging Port Operations Others 7

8 H1 2013/14 Profit Before Tax by Segment (Naira 000) % Change Food 5,915,373 9,051, Agro-allied 1,288, , Packaging 241,948 1,093, Port Operations -18, , Cement -65, ,268 n/a Others -28,366-47, TOTAL 7,332,987 10,415, 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 H1 2013/14 Profit Margins by Segment PBT margin % Change, bps Food Cement n/a Agro-allied Packaging Port Operations Others n/a Total

10 H1 2013/14 Cash Flow (Naira 000) 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) Significant increase in cash generated from operating activities The group continues to make important investments to support long-term growth 10

11 H1 2013/14 Balance Sheet (N ) Non-Current Assets 186, , ,279 Current Assets 99, , ,968 Total Assets 286, , ,247 Non-Current Liabilities 95,540 87,799 81,827 Current Liabilities 105,912 93, ,526 Shareholder s Equity 84,954 85,417 83,894 Increase in fixed assets the result of continuing investment 11

12 Outlook: strategic developments 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 12

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 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.