Resurrection is defined as the act of restoring a dead person to life.
Since companies are likened to human beings by law as having the ability to be created or killed by way of voluntary winding up, it is magical that Dangote Flour Mills (DFM) Plc, one of the largest millers in Nigeria has awakened from its potential demise.
The company recorded the fastest growth in terms of year to date return (ytd) on the NSE, compared to any other firm in the country.
Stock price closed at N3.08 as of 3:00 pm while ytd returns spiked +236.28 percent vs. -11.55 percent for the NSE-NSI Index, which underpinned market sentiments that brought it back to life.
Experts say the stellar performance is expected since more cash were injected into the business since Aliko Dangote, Africa’s richest man, took over the company he had sold to South Africa’s food giant Tiger Brand.
An analyst who doesn’t want his name mentioned said the former owners of the company did not understand the dynamics of the Nigerian markets despite sitting at the board of some firms in the country.
Since the South African’s bought DFM with a view to gaining access into the country’s markets, it has always been one huge right offs or the other. In short, the firm was ensnared in continuous losses.
DFM has been recording profits since Aliko Dangote bought a 65.75 percent stake and injected N10 billion to restructure and re-position the firm for better performance.
For the twelve month ended September 30, 2016, it recorded a profit after tax of N5.54 billion, from a loss position of N12.67 billion, the previous year.
Gross margins jumped to 26.03 percent in 2016 from 5.07 percent the previous year on the back of a 62.62 percent growth in sales. Its Net margin of 7.10 percent in the period under review is the strongest of all the millers in the country.
Before the buyback, DFM traded at around N0.54k on the NSE few years ago.
A severe dollar shortage, a weak consumer spending and the devaluation of the naira however means the company will have to intensify on its focus strategy of it wants to cling to its growth.
BALA AUGIE
