Trading session at NSE

Flour Mills of Nigeria Plc Thursday reported improved financial result for the first quarter (Q1) ended June 30, 2012.

According to the result released on the floor of the Nigerian Stock Exchange (NSE), the firm recorded growth of 10 per cent in turnover, 32 per cent in profit before tax and 42 per cent in profit after tax.

The company ended the Q1 of 2012 with a turnover of N70.7 billion, up from N64.2 billion in the corresponding period of 2011. Profit before tax rose from N3.9 billion to N5.1 billion in 2012, while profit after tax grew from N2.7 billion to N3.9 billion.
Shareholders did not react positively immediately to the result as the share price of Flour Mills of Nigeria remained stagnant at N52 per share.

However, analysts at FBN Capital Limited, in their first reaction to performance, remained neutral on the share price. While the analysts commended the improved profitability, they noted that operating expenses (opex) of the company rose by 19.6 per cent to N5.3 billion.

“Although we do not yet have management’s comments as to the key drivers behind the growth in opex, we note that some other consumer companies have also recorded sizable opex growth figures, 39.2 per cent in Nestle Nigeria’s case. One common driver in these consumer goods companies’ opex increase is increasing distribution costs in northern Nigeria as a result of the security challenges in the region.
Despite these headwinds, the strong profitability further up the profit and loss helped ensure that Flour Mills’ profit before tax grew robustly, by 32 per cent to N5.1 billion and profit after tax grew 42 per cent,” they said.

Meanwhile, trading at the stock market ended on a negative note as depreciation suffered by some blue-chip stocks wiped out part of the gains recorded the previous day. The NSE All-share Index fell by 0.05 per cent to close at 23,186.73.