Dangote Flour Mills (DFM) Plc appeared to have fully left the sour taste of the previous years of consecutive losses as the flour-milling company posted a pre-tax profit of N11.82 billion in 2016, its first profit in five years.
Key extracts of the audited report and accounts for the 15-month period ended December 31, 2016, released yesterday at the Nigerian Stock Exchange (NSE), showed impressive growths in sales and profitability, underlining the turnaround that has marked the return of Dangote Industries Limited (DIL) as majority core investor in the company.
The audited report, the first to be presented under the new core investor, showed that sales tripled to N105.77 billion in 2016 as against N48.03 billion recorded by the 12-month period ended September 30, 2015. Gross profit rose from N4.47 billion in 2015 to N29.35 billion in 2016. As against operating loss of N4.14 billion in 2015, DFM recorded operating profit of N18.93 billion in 2016.
Profit before tax stood at N11.82 billion in 2016 as against pre-tax loss of N12.47 billion. After taxes, net profit stood at N10.57 billion in 2016 compared with net loss after tax of N12.68 billion recorded in 2015. Earnings per share thus rebounded to N2.12 in 2016 as against loss per share of N2.51 in 2015.
DFM’s share price rose by 1.07 per cent to close at N3.79 at the NSE yesterday. It had recorded the second highest price appreciation of 276.1 per cent in 2016, riding on the crest of the return of DIL as the majority core investor and management of the flour-milling company.
By the year ended September 30, 2015, DFM’s pre-tax loss had built up to N12.47 billion while loss after tax had risen to N12.68 billion. In its fourth successive year of losses, accumulated losses had wiped out shareholders’ funds, leaving a deficit of N3.07 billion by the end of September 2015.
Faced with dire situation of outright liquidation and bankruptcy, Tiger Brands Limited, South Africa’s largest food company that had in 2012 bought the majority equity stake in DFM from DIL, considered many offers and options and in December 2015 reached agreement with DIL to resell the troubled flour-milling company to DIL.
Within six months of the return of DIL as majority core investor in DFM, the fundamentals had changed dramatically. Few months after the re-acquisition, DFM had returned to profitability, posting a profit before tax of N2.64 billion in the period ended June 30, 2016, compared to a loss of N9.55 billion posted in the corresponding period of 2015.
Group Chief Executive Officer, Dangote Flour Mills, Thabo Mabe has said the return to profitability was due to several strategies adopted by the company to increase market share and create value for shareholders.
He added that the flour-milling group is driven by the vision to put its products on the table of every Nigerian.