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FLOUR MILLS OF NIGERIA PLC 9M'24 EARNINGS - Topline expansion momentum sustained

Q3 revenue growth expands gross margin 
In the third quarter of FMN’s fiscal year 2024 (Oct to Dec ‘23), the company exhibited an exceptional performance, with revenue skyrocketing to ₦594.6 billion, a substantial 51% increase compared to Q3'23. This remarkable growth came about by a mix of volume growth and price increase especially in its retail markets. All segments saw considerable expansion in the quarter: Food grew by 38% to hit ₦386.3 billion, Agro-allied by 41% to ₦92.2 billion, Sugar 152% to ₦102.9 billion support 29% to ₦13.7 billion.

Operational efficiency and FX losses define bottom-line
In line with our outlook, FMN has stepped up cost optimisation to preserve its bottom-line. In Q3’24, operating expenses increased to ₦20.0 billion, indicating only a 10% y/y expansion in OPEX. However, FX-related losses were the biggest dent in FMN’s result for Q3. FX losses amounted to ₦77.1 billion as against the ₦10 billion recorded in Q3’23. This significantly reduced operating profit to ₦25 billion, but was still a 21% gain y/y. Ultimately, bottom-line for the period was ₦8.3 billion profit, up by 91% y-o-y.  This was sufficient to upturn the loss recorded in Q1’24 thus, bringing 9M’24 profit to ₦258 million.

Earnings Outlook: TP Estimated at ₦35.91
Given its continued impressive growth, we have restated our estimated FY’24 revenues and profit after tax to ₦2.2 trillion (+40% y/y) and ₦1.3 billion (-96% y/y) respectively. Also, this has led us to revise our TP slightly higher to ₦35.91.