Manufacturing and Energy

Northern Nigeria Flour Mills sustain loss

The nation’s economic landscape and headwinds in the recent years have been more challenging than some of the past years. This is because the international price of crude oil, Nigeria’s major source of foreign exchange earnings, dropped significantly during the period. This triggered a shortage of foreign exchange that led the nation’s currency to lose significant value, which according to some analysts, shave off the value the naira by about 85 per cent against the dollar.

In addition, the power and infrastructural challenges remain unresolved. These factors, amongst others, exerted considerable pressure on the companies’ input cost and the capacity to fully operate at optimum level.
Apart from the rising cost of raw materials, driven by the challenging macro environment, coupled with fiscal and monetary headwinds, which have resulted in marked reduction in domestic output, manufacturers have continued to groan under the pressure of the increased cost of operations.

Also, infrastructural deficit, particularly electricity supply and bad road networks have continued to hit hard on manufacturers, at times forcing some of them to fold up. The prevailing macro-economic indicators also point to a sector, which is headed for collapse if adequate measures are not taken to arrest the situation.

Following the headwinds such as weak demand on the back of slim wallets, most consumer goods companies in Nigerian have continue to find it difficult to weather the storm. One of the companies negatively affected is Northern Nigerian Flour Mills (NNFM) Plc, which have seen continuous loss in profits. The company, which had closed the full years ended March 2016 and 2017 in a negative note and has remained in the woods, as it recently finished the year ended March 2018 at a loss position attributed majorly to weak consumer demands, stiffer competition and lack of accessibility to key markets areas in the Northern part of the country. This followed rising wave of insecurities coupled with increased financing cost, which has resulted in slow growth of many fast moving consumer goods companies.

However, notwithstanding the drop in earnings, market sentiments for the shares of NNFM, one of the Nigeria’s fast moving consumer goods companies quoted on the floor of the Nigeria Stock Exchange (NSE) has remained relatively stable following positive investors’ confidence on the shares of the company. The share price, which closed at N5.50 per share in August, 2017 has recorded an appreciable growth. At close of business last Friday, the company’s share price stood at N6.55, an increase of N1.05 or 19.09 per cent year to date.



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