The tough operating environment notwithstanding, the directors of Dangote Flour Mills have recommended a dividend of 20 kobo per share to the shareholders of the company, while posting a turnover of N67.6 billion for the year ended December 31, 2010. The dividend of 20 kobo per share offered a dividend yield of 1.3 per cent.
Accoording to a statement issued by the company, the result presented to the Nigerian Stock Exchange (NSE) showed that the turnover rose by 10.12 per cent growth compared to N61.39 billion in the corresponding period of 2009.
Though the company’s profit before tax (PBT) declined slightly from N5.37 billion to N4.91 billion, reflecting the harsh operating business environment in 2010, the company’s tax to government increased to N2.19 billion.
Dangote Flour Mills consists of Dangote Flour, Dangote Pasta, Dangote Noodles and Dangote Agrosacks Limited.
It would be recalled that investment experts recently predicted a significant appreciation in the share value of the stock.
Vetiva Capital Market Limited projected that the share value of Dangote Flour would soon hit N24.62 per share, while Stanbic IBTC Africa projected a share value of N30.00 kobo per share.
According to the Vetiva 2011, outlook: “We revised our target price for ‘Dangflour’ to N24.62. Despite likely pressure on earnings from rising price of wheat on the global scene, our target price still gives a 28 per cent potential upside, hence our Buy rating on the stock”
Vetiva further stated that its optimism on the growth prospect of the company was premised on the company’s efforts at increasing capacity.
Stanbic IBTC Africa, in its report, stated “We maintain our Buy rating on Dangote Flour Mills Plc with a 12-month price target to N30.00, representing upside 58 per cent from current market price level.”
“The company has significantly raised its capacity over the past decade in anticipation of soaring demand for bread flour and, more recently, semolina, pasta and noodles,” Stanbic IBTC Africa stated.
It would be recalled that the management of Dangote Flour Mills recently said it had invested in its manufacturing capacities across the country, raising it from 4,500 metric tonnes to 7,300 metric tonnes per day, representing a 61 per cent net growth in volume turnover.
Dangote Flour has invested in ultra-modern technology with machines that are between three months and nine years old, in an industry where equipment are as old as 35 years old.
Giving a breakdown of its investment in capacity in Lagos, the Group Managing Director of the company, Rohit Chaudhry, explained that the Apapa, Lagos plant capacity was raised from 1,000 metric (MT) tonnes to 2,500/day, while Calabar was raised to 1,500MT from 1,000MT/day, and Ilorin, Kwara State from 500 to 1,000MT/day.
“The investment is despite the global economic meltdown. These projects have since been completed with the exception of Apapa mill which is scheduled for completion in the second quarter,” he said, while announcing the start of direct export to Chad, Cameroon, Niger and the West Coast.
This, he said, “is besides other ongoing indirect export of Dangote Flour products through the activities of middlemen and customers,” stressing that the company, over the years, had transformed through product development and planned to be a five-product firm by next year with the introduction of maize flour for the Kano market.
He said the company “plans to control a major chunk of the 295 million population within the Economic Community of West African States (ECOWAS) market,” stressing that “it remains thoroughly Nigeria-centric, dedicating 80 per cent of its capacity to domestic market, and the remaining to the region.”
“Dangote Flour has invested in ultra-modern technology, with machines that are between three months and nine years old, in an industry where equipments are as old as 35 years old.
“The ongoing semolina mills of 1,500MT per day would come on stream by the end of the second quarter. This is a dedicated mill for the production of Danvita- our brand of semolina with the latest milling technology. This would definitely lead to product consistency.
Not only are we one of the very few flour millers in Nigeria that have mills dedicated to semolina production, we are the only dedicated mill with the highest number of production lines,” he added.