Flour Mills of Nigeria Plc to invest US$1B in expansion, restructure operations

NIGERIA – Flour Mills of Nigeria Plc (FMN), the largest milling company in the country, has announced a significant expansion plan, committing up to US$1 billion over the next four years to bolster its operations and support Nigeria’s agricultural and industrial growth.

John Coumantaros, the company’s Chairman, disclosed this during a recent interview, emphasizing that the planned investments reflect FMN’s commitment to boosting local production and contributing to the Nigerian economy.

One of the key areas FMN is targeting for expansion is its sugar business. The company has earmarked at least US$500 million for investments in its sugar operations in Niger State.

Currently producing 100,000 tons of sugar annually, the company aims to increase production to over 400,000 tons.

In addition, FMN is allocating US$100 million towards establishing a cassava-processing plant, with the primary objective of eliminating the need for cassava starch imports.

This move aligns with Nigeria’s agricultural diversification goals, focusing on boosting local production of key raw materials and reducing the foreign exchange burden from imports.

As part of its cassava strategy, FMN also aims to support smallholder farmers by creating a reliable market for their produce, which could significantly enhance rural economies.

FMN’s aggressive expansion plan comes at a time when the company is facing financial pressures. In the 2023/2024 financial year, the company spent around N1.8 trillion (US$2.3 billion) on raw materials, contributing to a sharp 91% drop in profits.

Despite these challenges, the company remains focused on long-term growth and investment.

Coumantaros acknowledged the substantial capital requirements for the expansion, noting that most of the funding will be internally sourced.

 “The requirement for capital is going to be very, very large. And, of course, we will be backing the majority of that,” he stated.

He also emphasized the importance of bringing in technical and financial partners to support the expansion efforts.

Restructuring and AfCFTA Expansion

In tandem with its investment plans, FMN is undergoing a major restructuring of its business operations.

The company plans to consolidate its over 22 business units into five separate entities. This move is aimed at enhancing efficiency, attracting technical and financial partners, and streamlining operations to better focus on core business areas.

FMN is also looking to capitalize on the African Continental Free Trade Area (AfCFTA) to expand its presence across Africa, with an initial focus on West Africa.

“With the inception of the AfCFTA, we believe strongly that we shouldn’t just be looking at the Nigerian market,” Coumantaros stated.

He added that the company envisions becoming a pan-African food business headquartered in Nigeria, leveraging AfCFTA to explore new markets and opportunities across the continent.

Dual listing and future prospects

As part of its broader expansion strategy, FMN is considering a dual listing on both the Nigerian Stock Exchange (NGX) and another international stock market.

Coumantaros mentioned that the company is likely to relist after its repositioning, aiming to return to the market as a pan-African food or agro-allied business.

However, before this move, FMN plans to focus on reorganizing, retooling, recapitalizing, and refocusing its business to ensure it is well-positioned for such a listing.

Sign up to receive our email newsletters with the latest news updates and insights from Africa and the WorldHERE.