Northern Nigeria Flour Mills (NNFM) Plc has reported a sharp decline in profitability for the 2025/2026 financial year despite recording significant growth in assets and shareholders’ funds, as rising finance costs, weaker revenues and mounting liabilities weighed heavily on earnings.

The company’s audited financial statements for the year ended March 31, 2026, showed that profit after tax plunged by 98.5 per cent to N25.6 million from N1.75 billion recorded in the previous year, underscoring the severe pressure facing manufacturers amid Nigeria’s harsh operating environment.

Revenue also declined sharply by 39.1 per cent to N21.55 billion from N35.39 billion in 2025, while gross profit fell to N1.75 billion from N5.15 billion. Operating profit dropped to N329.7 million compared with N2.89 billion recorded a year earlier.

The latest result highlights the growing strain on manufacturing firms grappling with soaring borrowing costs, weakening consumer demand, foreign exchange volatility, and rising production expenses.

A review of the company’s balance sheet showed that total liabilities surged to N31.03 billion from N20.86 billion in the previous year, driven largely by fresh borrowings of N15.02 billion, compared with no borrowing obligations recorded a year earlier.

Finance costs rose sharply to N306.8 million from N12.7 million, further eroding profitability and reflecting the impact of elevated interest rates on manufacturers’ earnings.

Despite the weak earnings performance, the company recorded substantial growth in total assets, which rose by 41.3 per cent to N43.17 billion from N30.55 billion.
Shareholders’ funds also increased to N12.14 billion from N9.69 billion, supported mainly by a N2.43 billion revaluation surplus on property, plant and equipment.

Property, plant, and equipment increased significantly to N12.02 billion from N7.18 billion, while trade and other receivables expanded sharply to N8.63 billion from N1.01 billion.

The company also disclosed loans to related parties amounting to N1.71 billion during the year.

Although earnings weakened considerably, Northern Nigeria Flour Mills maintained dividend payments to shareholders, declaring a dividend of N44.55 million during the year, lower than the N89.1 million declared in the preceding year.

Earnings per share declined steeply to 14 kobo from 979 kobo previously, reflecting the sharp contraction in profitability.

Cash flow from operations, however, returned to positive territory at N698.1 million, compared with a negative operating cash flow of N1.96 billion in 2025, supported largely by improved working capital management and higher trade payables.

The company’s independent auditors, KPMG Professional Services and Ahmed Zakari & Co., issued an unmodified opinion on the accounts, stating that the financial statements presented a true and fair view of the company’s financial position in line with International Financial Reporting Standards and Nigerian regulatory requirements.

The auditors also confirmed that there were no key audit matters to report for the financial year under review, while affirming the effectiveness of the company’s internal control systems over financial reporting.
Management, led by Managing Director Adrian Naidoo and Chief Financial Officer Emmanuel Akajagbon, also certified that the company maintained effective internal controls and that no fraud involving management or employees with significant control responsibilities was identified during the period.

The directors further expressed confidence in the company’s ability to continue as a going concern despite the challenging business climate.

 

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