Northern Nigeria Flour Mills Plc (NNFM) has reported a robust 35.4% increase in revenue, reaching ₦29.56 billion for Q3 2025, despite a decline in sales volume.
The company’s profitability soared, with Profit After Tax (PAT) increasing by 165.4% to ₦4.11 billion, leading to a Basic Earnings Per Share (EPS) of 2,307 kobo, a 165.4% jump from 869 kobo in Q3 2024.
Despite rising cost of sales, NNFM maintained profit growth through strong cost controls, lower finance expenses, and increased operational efficiency.
Key Financial Highlights (Q3 2025 vs. Q3 2024)
- Revenue: ₦29.56 billion (2024: ₦21.83 billion) ↑35.4%
- Cost of Sales: ₦25.73 billion (2024: ₦16.45 billion) ↑56.4%
- Gross Profit: ₦3.83 billion (2024: ₦5.38 billion) ↓28.8%
- Operating Profit: ₦4.12 billion (2024: ₦1.57 billion) ↑162.3%
- Profit Before Tax (PBT): ₦4.11 billion (2024: ₦1.56 billion) ↑164.3%
- Profit After Tax (PAT): ₦4.11 billion (2024: ₦1.55 billion) ↑165.4%
- Basic Earnings Per Share (EPS): 2,307 kobo (2024: 869 kobo) ↑165.4%
NNFM’s significant profit expansion was driven by lower operating costs, reduced finance expenses, and higher operating efficiency.
Revenue Growth: Key Drivers
NNFM delivered a strong revenue performance despite a decline in sales volume, primarily due to:
1. Strategic Pricing Adjustments & Product Mix Optimization
- Total sales volume declined by 8.1% to 29,534 metric tons, reflecting higher unit pricing strategies to offset inflation.
- Revenue still increased by 35.4%, demonstrating effective price optimization.
2. Higher Demand for Premium Flour Products
- Premium flour and fortified wheat-based products contributed to revenue growth, as consumers shifted towards higher-value offerings.
3. Expansion into New Distribution Channels
- NNFM expanded its regional distribution network, increasing sales penetration despite volume constraints.
While cost pressures impacted gross margins, pricing power and cost efficiencies contributed to overall earnings growth.
Earnings Per Share (EPS) Growth: Key Factors
NNFM’s EPS surged by 165.4% to 2,307 kobo, reflecting strong earnings growth and cost control measures.
1. Lower Operating Costs Enhanced Profitability
- Selling & distribution expenses fell sharply to ₦334.84 million, down from ₦3.20 billion.
- This efficiency gain boosted operating profit to ₦4.12 billion, a 162.3% YoY increase.
2. Improved Debt Management & Lower Finance Costs
- Finance costs declined by 30.3% to ₦13.84 million, as NNFM reduced debt exposure and interest obligations.
3. Surge in Other Operating Income
- Other income rose to ₦1.64 billion, compared to ₦32.25 million in Q3 2024, reflecting higher sundry income contributions.
4. Stronger Capital Allocation & Shareholder Returns
- Total equity rose 49.6% to ₦12.05 billion, enhancing financial stability and long-term value creation.
- Dividends paid increased to ₦89.10 million, rewarding shareholders.
These factors collectively drove EPS growth, reinforcing NNFM’s financial resilience amid rising costs.
Operational Highlights & Cost Management
1. Cost of Sales Increased, But Efficiency Gains Maintained Profitability
- Cost of sales surged 56.4% to ₦25.73 billion, mainly due to higher raw material and transportation costs.
- However, gross profit margins compressed to 12.9%, from 24.6% in Q3 2024.
2. Significant Reduction in Selling & Distribution Expenses (-89.5%)
- Cost-cutting measures led to lower selling & distribution expenses, boosting operating profit margins.
3. Higher Administrative Expenses Reflect Business Expansion
- Administrative expenses increased to ₦1.01 billion, up from ₦638.90 million, reflecting expansion efforts and inflationary adjustments.
4. Lower Finance Costs Indicate Stronger Liquidity Management
- Finance costs dropped 30.3% to ₦13.84 million, supporting better profitability despite cost pressures.
These efficiency improvements helped offset gross margin declines, enabling profit growth and higher shareholder value.
Balance Sheet Strength & Financial Position
NNFM maintained a solid balance sheet, positioning itself for continued expansion:
- Total Assets: ₦27.02 billion (2024: ₦16.68 billion) ↑62%
- Total Equity: ₦12.05 billion (2024: ₦8.05 billion) ↑49.6%
- Cash & Deposits: ₦1.04 billion (2024: ₦3.60 billion) ↓71%
- Trade Payables: ₦12.88 billion (2024: ₦6.62 billion) ↑94.6%
- Inventories: ₦16.46 billion (2024: ₦5.13 billion) ↑220.9%
Key Takeaways from Balance Sheet Movements
- Higher inventories reflect increased raw material purchases, ensuring production stability.
- Rising trade payables suggest NNFM is leveraging supplier credit terms to manage cash flow.
- Lower cash reserves indicate reinvestment in working capital and operational expansion.
These trends demonstrate NNFM’s strategic capital deployment to sustain long-term growth.
Dividend & Shareholder Returns
NNFM increased its dividend payout, reflecting strong profitability and commitment to shareholder value:
- Dividends paid rose to ₦89.10 million, compared to ₦62.37 million in the previous year.
- Higher EPS supports the potential for future dividend increases.
With sustained earnings momentum, NNFM is well-positioned to maintain strong shareholder returns.
Macroeconomic & Industry Outlook
1. Inflation & Cost Pressures in Nigeria
- Nigeria’s inflation reached 34.8% in December 2024, affecting input costs.
- NNFM’s pricing strategy helped mitigate inflationary impacts on margins.
2. Exchange Rate Volatility & Import Costs
- The naira depreciated to ₦1,533 per USD in January 2025, increasing flour import costs.
- NNFM’s local sourcing initiatives may help stabilize costs over time.
3. Strong Demand for Flour & Wheat-Based Products
- Flour demand remains stable, supporting NNFM’s long-term revenue potential.
Strategic Priorities for 2025
1. Enhancing Cost Optimization & Efficiency
- Further reductions in operational expenses to sustain profit margins.
- Optimizing procurement and logistics to lower costs.
2. Sales Volume Recovery & Market Expansion
- Strengthening distribution channels to drive higher sales volume.
- Expanding product offerings to cater to diverse consumer segments.
3. Strengthening Liquidity & Cash Flow Management
- Improving trade payable cycles to manage working capital.
- Exploring financing options to support business growth.
Conclusion
Northern Nigeria Flour Mills Plc’s Q3 2025 results highlight strong revenue growth and substantial profitability expansion, despite cost pressures.
- Revenue grew 35.4% to ₦29.56 billion, supported by pricing strategies and market expansion.
- EPS surged 165.4% to 2,307 kobo, reflecting profitability strength.
- Cost savings in distribution & lower finance expenses enhanced margins.
- Higher inventory & trade payables suggest investment in future growth.
With a solid financial base and strategic growth initiatives, NNFM is poised for sustained performance in 2025.
