FLOUR MILLS OF NIGERIA PLC H1'21 - On track for an impressive year
Stronger volumes boost Revenue
Solidifying its Q1’21 performance, Flourmills released impressive H1’21 results, reporting a 31% y/y Revenue growth to ₦355.1 billion (H1’20: ₦323.9 billion) and rising well above our 20% growth estimation. Driven by its expansion into the value space of the food segment and increased efficiency from its B2C distribution strategy, Flourmills saw stronger (+10%) growth in food volumes. Food Revenue grew 41% y/y in Q2, driven by pasta and semovita. Likewise, we believe that the company has continued to ride on its market share gains from stricter land border controls, reporting improved volumes in its Agro-allied and Sugar business segments, and growing Revenue by 64% y/y and 49% y/y respectively. Although Gross margin declined 5ppts q/q, we saw a 2ppt y/y improvement for the half year, owing to increased scale and in spite of the sizeable currency depreciation between these periods. Opex, however, jumped 16% y/y, driven by a 38% spike in Q2 Admin expenses, specifically General Admin expenses and power costs. Thus, EBIT came in at ₦23.7 billion, 15% lower than our expectation of ₦28.0 billion, with EBIT margin rising 1ppt y/y to 7% in H1’21
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