Apapa gridlock, low customer spending slow Flour Mill profit down 46%

The persistent traffic jam in Apapa, Lagos, where Flour Mills factory is located, and low customer spending were responsible for the significant drop in its second quarter profit, the company claimed in a release sent the Nigerian Stock Exchange on Wednesday.

Flour Mills post-tax profit declined -46 per cent year-on-year to N5.07 billion, compared to N9.36 billion it raked in Q2 2017/2018 financial year.

The group blamed the Apapa gridlock for the -10 per cent drop in its revenue to N269.74 billion against N298.44 billion it recorded in the corresponding period last year.

While revenue dipped, sales and distribution costs increased 49 per cent to N4.13 billion, compared to N2.77 in the same period last year.

However, Flour Mills made significant progress in cutting its finance cost by 45 per cent to N11.23 billion against N16.27 billion in Q2 2017/2018.

Commenting on the company’s performance, Paul Gbededo, Group Managing director, Flour Mills said, “In the face of persistent economic challenges and difficult operating terrain, we continue to pursue our growth strategy to gain market share in all key product segments. Operations in Apapa continues to suffer major setbacks in traffic and logistics challenges, impacting the marginal drop in our volume and top line activities.

“With improved marketing and promotional activities for most of the key food businesses, we envisage new gains in the remaining part of the year, as we continue to focus on innovative products that deliver on great consumer experience.”