Flour Mills of Nigeria (FMN) Plc, owners of the popular Golden Penny Food brand started the year on a solid note as the company reported a Profit After Tax (PAT) increase of 17 percent in the first quarter of 2020.
Primarily behind strong growth in its Agro-allied division and local value-added products plus effective cost control, FMN in the first quarter of this year recorded a Profit Before Tax (PBT) of N2.1 billion, compared to a loss of N0.2 billion in the previous year.
In line with FMN’S strategy, the company said its business remained resilient and continued to deliver value for shareholders while focusing on organic growth across all segments with continuous attention on its Agro-allied division and local value add with consumer-centric programs.
According to Paul Gbededo, even though the first quarter of the financial year is perhaps one of the most complex periods facing businesses in Nigeria and across the globe, FMN is happy that its business has continued to explore newer opportunities to create value and wealth for its shareholders.
“The year 2020/21 is unique in many respects, as the terrible outbreak of COVID-19 continues to affect the world in unprecedented ways. Recognising how important our business model is to the food value chain in Nigeria, we are honoured to have been able to take an active role in the fight against this virus, by ensuring our operations remained unhindered to produce food for Nigerians at such a trying time,” Gbededo said.
Breakdown of the Q1 financial results of FMN, one of Nigeria’s leading integrated Food business and Agro-allied Group shows that its PAT expanded to N4.9 billion as against N4.2 billion in the comparable quarter of the previous year.
With a broad basket of food products and robust pan- Nigerian production, distribution, and supply chain network, FMN reported a 15 percent increase in its earnings from N134.7 billion in Q1 2019 to N154. 6 billion in 2020.
Analysis of the Q1 financial report released on Monday by FMN shows that the Group’s operating ratio was down to 4.5 percent in the review quarter from 5.0 percent reported the year before. Lower operating ratio compared to the last previous two years.
Having an Agro-allied business that recorded solid improvements following past investments and increased focus on local inputs through both in-grower and out-grow
impact to date is low, with Fintech activity accounting for only ~1.25 percent of retail banking revenues in 2019,” authors of the report noted. “A concerted effort by all stakeholders to address structural challenges is required to capture a greater share of Nigeria’s $50 billion digital financial services opportunity, and mitigate emerging risks as the sector evolves.”
There are also consumer issues that need to be addressed. These include limited access to financial services and products. EFINA says the pricing of products is the biggest obstacle to fintech adoption. Consumers also have access to a few products that are tailored to their actual needs.
Another issue is the exorbitant rates charged by lending and insurance firms. In recent times, banks have capitalised on this to release various quick loan services. Top on the list of complaints for some customers is the underwhelming user experience on various fintech platforms.
Accessibility to funding in the sector is also biased to fintech firms with foreign affiliation. About 84 percent of funds were invested in foreign or foreign affiliated fintech excluding Visa into Interswitch. Diaspora founders often leverage their networks to deliver funding pitches based on the requirements of international investors.
“Foreign accelerators like YC Combinator and 500 Startups have helped few Fintech to bridge the preparation and access gap,” the report noted.
China which has invested more money than other countries – although in fewer startups – has focused exclusively on fintech firms with Chinese links. The $210 million investment it brought in 2019 went to Chinese founded businesses.