High operational cost depressed the profit of Dangote Flour Mills Plc for the first quarter ended March 31, 2012. While the company posted a gross profit of N2.61 billion, increase in distribution and administration and financing costs among others, led the company to end the quarter with a loss of N117 million.
Analysis of the result showed that Dangote Flour recorded a turnover of N13.79 billion compared with N14.934 billion in the corresponding period of 2011. Profit before tax stood at N2.013 billion, up from N1.022 billion in 2011.
However, distribution and administration expenses rose from N1.022 billion in 2011 to N2.013 billion in 2012. Similarly, net financing cost rose from N365 million to N722million.
Consequently, Dangote Flour ended the quarter with a loss after tax of N117 million as against a profit after tax of N441 million in 2011.
However, the company, in a statement at the weekend, said the management would continue to work hard so as to deliver improved returns to shareholders in the 2012 financial year.
According to the statement, Dangote Flour Mills would perform better as its expansion project to enlarge manufacturing and packaging facilities, which started some years back would be completed very soon.
“Dedicated plant for production of our wheat meal brand Alkama and Danvita would soon be ready for commissioning any moment from now. This would no doubt, tremendously boost our top line growth this year as plans are already in place to massively launch the products and increase the distribution networks to all the hinterlands,” the company said.
Dangote Flour Mills has significantly raised its capacity over the past decade in anticipation of soaring demand for bread flour and, more recently, semolina, pasta and noodles.
The company has also expanded its manufacturing capacities across the country in spite of the global economic meltdown while it commenced direct export of its products into Chad, Cameroon, Niger and the West Coast of Africa.