The Group Managing Director/Chief Executive Officer of Flour Mills of Nigeria Plc, Nigeria’s leading food business and Agro-allied group, and a key player within the FMCG industry, Boye Olusanya,in this interview, provides insights on the Group’s sustainability approach through local content development in Nigeria. Oluchi Chibuzor present the excerpts
What is your take sir on FMN’s performance in the last financial year?
I am pleased with our full-year results. Despite an increasingly challenging business climate, including rising international food prices and input costs that reduced gross margins by 5% to N108 billion, our business continued to show its resilience. The group had outstanding top-line growth across all business segments for the year, with revenue increasing by 51% and Profit Before Tax reaching N41 billion, up from N37 billion in the prior year. Our food segment grew by N270 billion due to higher B2B volumes and growth in core B2C categories as we continued to expand our focus on local content.
I must point out that we couldn’t have achieved the level of performance we reached in the last financial year without our team’s relentless dedication. So, I want to take this opportunity to express my gratitude to my FMN family. I feel fortunate to work with some of our industry’s most brilliant and driven individuals. In keeping with our purpose of feeding the nation every day and our operational expectations, I can happily say that our businesses are geared towards achieving profitability and cash flow generation in the future.
Recently, FMN acquired a 71.69% stake in Honeywell Flour Mills. What are the key drivers of this strategic business move?
The acquisition is consistent with our short-to-medium-term goal of increasing and solidifying our footprint in the Nigerian market. With the acquisition of Honeywell Flour Mills Plc, the FMN Group has become a more resilient national champion with an ambition of becoming a market leader in Africa. Given the size of the acquisition, it is fair to say that we have created even more opportunities for our stakeholders, including our consumers across the country, who can now benefit from a broader product range, supported by a robust Pan-Nigeria distribution network. In addition, our employees now have better career development prospects, and our investors can bank on creating a new African giant in the food space positioned to reap the benefits of the growing Nigerian population and leverage opportunities stemming from the AfCFTA. Undoubtedly, the acquisition serves as a catalyst for a more substantial stream of innovation focused on local content offerings, better access to food, improved nutrition, and economic emancipation for local communities. As you can imagine, the combined entity has become a critical provider of the continent’s food needs.
As an organization that is sustainability-focused, can you tell us about FMN’s sustainability mandate in terms of organizational vision, content localization, supply chain optimization, and your B2C roadmap?
Our sustainability agenda is themed ‘Localization for Sustainability. There is a need to localize our sustainability plan in such a way that our supply chains across all levels will be self-sustaining and resilient enough to withstand the emerging volatile socio-economic environment. In our role as an Enabler and sustainable provider, FMN is greatly committed to increasing our local content. The need to create value further back in the supply chain and reduce dependence on imported raw materials has been identified as a strategic imperative for our Group in the years ahead. Our supply chain optimization plan is a connected system of organizations, activities, information, and resources designed to source, produce, and move our products from origination to the final destination, which in this case is our consumers. As an organization, we recognize that our business is ultimately about providing for the livelihoods of millions of families, thus we need to innovate across all our value chains and touch points. As we respond to our consumer’s needs, we would put in place feedback channels that allow for impact data, and insights, which in turn would form the basis of our future creations thus creating process efficiency. From our upstream supply chain outlook, our continued investment in the Food and Agro-Allied sector is predicated on the need to achieve economies of scale in food production via a crop-specific value chain, increasing productivity and ultimately modernizing the country’s agricultural sector. In the downstream sector, our projection is to continue to innovate the supply chain system for process efficiency so much so that our consumers can satisfactorily access our products and services from their places of comfort in a timely manner.
Furthermore, the Group established a Backward Integration Program (BIP) to create value in the supply chain and reduce dependence on imported raw materials, especially sugar and wheat. A clear demonstration of FMN’s commitment to the development of the sugar value chain in Nigeria is through Sunti Golden Sugar Estates in Niger State, which is widely regarded as the country’s premier greenfield investment in the sugar industry since its inception in 2012. With a total landmass of over 21,000 hectares, including a world-class sugar refinery, the company continued to expand operations at Sunti Golden Sugar Estate including an additional $300 million in Nasarawa state and a commitment to investing another N70 billion over the next three years to develop the upland area of the Sunti Sugar Estate. Holistically, we are looking at creating an integrated supply chain that can provide us with a competitive advantage and complete access to high-quality, fair-priced products from cultivation to final consumption while accelerating food processing, value addition, and the sustainable development of our supply chain. As an organization with strong sustainable guidelines, we need to be flexible, agile, and innovative across all our value chain.
Congratulations on the recent launch of Sunti Brown Sugar. Would you say this achievement indicates that your investments in local content promotion and backward integration are yielding the desired results?
I am happy to say that it is. As a leading food processing business, we have always felt the need to be involved in all stages of the food value chain. We believe it is crucial to securing our supply chain, as it ensures that we have total quality control over our production process and can continue to deliver the highest quality of products to our consumers. And that is why we have, over the years, continued to invest heavily in backward integration. Focusing on our five core value chains of grains, oils and fats, starch, feeds and protein, and sugar, I am happy to say that we have achieved varying levels of success. Working with local farmers, we are contributing to the modernization of the agriculture sector and, for the most part providing a solution to the development of raw materials grown locally to supply the needs of the Nigerian market and, progressively, for exports. Just a few years, we reimagined one of Nigeria’s favourite staples with the introduction of Golden Penny Garri, which, might I add, speaks volumes to our commitment to developing newer products through customer-driven innovation as with the launch of Sunti Brown Sugar.
Made from naturally grown sugarcane, cultivated, harvested, and processed locally in Sunti, Niger State, Sunti brown sugar is our way of showcasing what is possible when we invest in Nigeria. We partnered with our local communities and Nigerian farmers to develop a product that Nigerians can truly be proud of. This product clearly demonstrates our commitment to the vision of the National Sugar Master Plan and the self-sufficiency in the production of sugar agenda in Nigeria. I dare to say that Sunti brown sugar seeks to restore Nigeria’s lost glory in the community of sugar-producing nations since we are still the only brand of brown sugar that is currently 100% wholly produced in the country.
What proactive strategic plans does FMN have in place to ensure uninterrupted business operations amid unprecedented and emerging volatile socio-economic environments?
The thinking that drives business continuity plans in the event of socio-economic shocks should ideally be crisis-specific because you can’t realistically anticipate all crisis scenarios. I can’t imagine that, as recently as 2019, executives in Nigeria and around the world, expected that their major operational imperative in 2020 would be responding to the COVID-19 pandemic. At the moment, our plans are situated largely in the context of the particular risks that affect the Nigerian environment, some of which are global risks from the downstream sector. Given interconnected global commercial relationships and the global supply chain, businesses are bound to be affected by the ongoing conflict between Ukraine and Russia as stated earlier. Thus, as an organization with both a nationwide reach and strong ties to international markets, FMN has put in place a business continuity plan to safeguard our supply chain and food production process to ensure that Nigerians can continue to have access to their daily nourishment. We have plans in place for all possible scenarios that can be activated as needed. Uniformly operating under the theme of content localization, we would continue to strengthen the capabilities of our people, from our network of smallholder farmers, young entrepreneurs, communities, our stakeholders, and society at large. FMN will remain vested in the provision of enabling structures in the areas of human capital development, provision of quality inputs, specialized training, and related extension services.
Holistically, we are also looking at creating an integrated supply chain that can provide us with a competitive advantage and complete access to high-quality, fair-priced products from cultivation to final consumption while accelerating food processing, value addition, and the sustainable development of our supply chain.
