NFM records 29% increase in profits

NATIONAL Flour Mills (NFM) has reported a profit after tax of $20.5 million for the first half of 2024.

In its unaudited financial results as of June 30, NFM said this represents a 29 per cent profit increase over the same period in 2023.

NFM said while its overall volumes increased by more than five per cent year-on-year, revenue declined by 12 per cent.

"This was driven by significant decreases in prices as we shared the benefit of lower grain prices with our customers," NFM chairman Nigel Romano said in his review.

He added that prudent management of grain purchases, helped by stability in grain markets, led to an increase in NFM's gross profit margins.

Additionally, lower sales and finance costs paved the way for an increase in its net profit margin from 5.5 per cent in the first half of 2023 to 8.1 per cent this year.

"In addition to passing on some of the savings achieved to our customers, we continued to sharpen the saw, investing in upgrades to our plant and machinery.

"We are pleased to report that our new 2 kg packaging line was installed and commissioned. This new line will improve not only the quality of our products but also our production efficiency," said Romano.

He added that planned upgrades to the company's packaging lines for the next three quarters will also increase efficiency and allow the company to introduce new, exciting product offerings.

NFM will also begin transitioning some of its existing products to more modern, consumer-friendly packaging.

"In keeping with our promise to create value, we continue to support our customers with various initiatives. We hosted a Baking Mastery Workshop for our customers in collaboration with our partners, the US Wheat Associates. We also continued to provide technical solutions for issues faced by our feed customers helping them to respond to the growing threat of imported meats," Romano said.

He added that the ability to deliver on time and in full remains an important metric for the company.

The company has also launched the distribution of food products from its Central Trinidad location, in an effort to provide better services to its south and central customers.

Over the past four years, the price of flour has seen frequent fluctuations.

On May 1, NFM announced a reduction in the cost of retail flour products across its entire range of retail products. It added the company had been reducing prices since Christmas 2023.

Speaking to Business Day on June 13 on the issue of market volatility, NFM’s CEO Ian Mitchell said the price of flour is determined by the cost of wheat as traded on the Minneapolis Grain Exchange and the Chicago Board of Trade, with the cost of freight being an additional price determinant. This leaves the market open to exogenous shocks that have been rocking customers' pockets.

In July 2023, NFM reduced the price of flour for its retail customers by ten per cent. This was in stark comparison to the previous year (2022) when the company had announced an increase in wholesale prices by 33 per cent and retail prices by 28 per cent.