RISING cost of sales wiped out the earnings of Northern Flour Mills, a subsidiary of Flour Mills of Nigeria (FMN), in the 9 months to December 31, 2025, resulting in a loss of N144.453 million.

The Kano-based flour miller earned a total of N18.368 billion in revenue in the 9 months to December 31, 2025, but cost of sales (N17.035 billion) took 93 percent of it. This is an indication that the rising costs of production, distribution and sales were a major challenge for the food maker in 2025.

Consequently, Northern Flour Mills incurred a loss of N144.453 million over the period, though a decline from N4.112 billion reported in the corresponding period of 2024.

Its third quarter (Q3) results ending December 31, 2025, were even worse, with revenue dropping by 95 percent to N4.335 billion as against N8.468 billion in the corresponding period of 2024. The ratio of cost of sales to the revenue of Northern Flour Mills in Q3 of 2025 was 94.4 percent, which also underlines the impact of the rising cost on the firm’s earnings.

Inevitably, the rising cost eroded the firm’s bottom-line, leading at a N585.72 million loss in Q3 of 2025. The firm is, however, technically solvent as its assets are sufficient to pay for its debt or liability. Total assets stood at N31.968 billion in the 9 months to December 31, 2025, while total liabilities were put at N22.484 billion over the period.

Yet, costs posed a major problem for the flour miller. What the firm classified as ‘other expenses’ jumped 42 percent to N148.401 million in the 9 months to December 31, 2025, from N104.719 million reported in the corresponding period of 2024.

Cost of insurance also increased by 17 percent to N32.414 million in 9 months to December 31, 2025, from N27.773 million recorded in the corresponding period of 2024. Employee cost, which included payment of salaries, also increased 68.33 percent to N62.884 million, from N19.911 million in the same period of 2024.

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Also, advertising cost jumped by 66.35 percent to 158.137 million in 2025 from N95.063 million reported in the corresponding period of 2024. Cost of invetory rose by 26 percent to N20.752 billion from N16.464 billion reported in the corresponding period of 2024.

Challenges of flour millers

Flour millers are hard hit by low sales due to consumers’ eroding purchasing power amid high inflation. Like other manufacturers, flour millers are contending with high production costs due to the rising energy and high cost of moving goods from the factory to the market. The costs of alternative power sources have also been on the rise, with prices of petrol, diesel and low-pour fuel oil (LPFO) high.

Insecurity is also worsening the plight of the manufacturers, revving up their distribution and sales costs. Northern Flour Mills is particularly hurt by a difficult production environment, characterised by insecurity, low power supply and poor infrastructure.

However, the challenge with Northern Flour Mills is not strange, as it also affects other manufacturer in Nigeria.

“Manufacturers are still battling high cost of logistics, which raises their distribution and sales costs,” said an Abuja-based economist, Dr Paul Idua.

“Every manufacturer goes into the market to source its own dollar to import inputs that are not available locally. Many manufacturing companies have exited the national grid and are generating their own power. By the last count, manufacturers self-generate over 13,000 megawatts (MW) of electricity. This shows you that what a company like Northern Flour Mills must do is to optimise its costs and reduce its spending. Also, it must do well to expand its market so as to earn more revenue.”

Data show that several manufacturers have exited the national grid and now generate their own power. These manufacturers include: Pulkit Alloy and Steel Limited, Everest Pulp and Paper Limited, Obu Cement Company Limited (BUA) in Okpella, Edo State,Nigeria Pipes Limited, SweetCo Foods Limited with 1.50MW; African Steel Mills with 20MW; Armilo Plastics, 1.13MW; Royal Engineered Stones, 4MW; West African Ceramics Limited, 10MW; Ro-Marong Nigeria Ltd, 4.40MW, and Psaltry International Company Limited, among others.

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