Apr 2006 Financial News

NFM releases year end results

Apr 26, 2006

National Flour Mills (NFM) reported Earnings Per Share of 8.6 cents for the year ended December 31, 2005 down 36.76 per cent from 13.6 cents for the similar period in 2004. This was the Company's third successive year of decline.

This year’s decline was as a result of several challenges faced during the year including increases in costs, lower domestic flour prices and the shutdown of the Crushing facility at Edible Oil Complex in the latter half of the year.

Turnover was down 10.95 per cent as sales volumes declined due to competition in the flour market while expenses fell 4.68 per cent from $62.201 million to $59.291 million. Profit attributable to shareholders was down 36.67 per cent to $10.359 million.

The Company has declared a final dividend of 3 cents. This brings the total dividends paid to 8 cents and would translate into a dividend payout ratio of 93.02 per cent.

The fate of the Company is now in the hands of its newly appointed Chief Executive Officer, Neil Rolingson. Though at the current price of 68 cents NFM is currently trading at a low p/e ratio of 7.91, given that the company is going though some restructuring, we currently recommend a HOLD on this share .

Jason Gokool
Sreshtha Tewari
Wise Research Team