Paul M. Gbedebo – Nigeria’s Top 10 CEOs, 2018

Mr. Paul M. Gbedebo,group managing director/CEO, Flour Mills of Nigeria, heads one of the most diversified organisations in Nigeria. The activities of the group include production of a number of food products, production of livestock feeds, farming and agro-allied businesses and real estate.

It also undertakes distribution and sale of fertilizer, manufacturing of laminated woven polypropylene sacks and flexible packaging materials. The group also operates Terminals A and B at the Apapa Port, handles customs clearing, forwarding and shipping agency and logistics.

In the course of 2018, the group added further to the long list of its operations in the Nigerian economy by stepping into the all important electricity generation business. It is in the process of securing an embedded electricity generation licence to operate a 70 megawatts power plant in Lagos.

Gbedebo is the man driving the large business empire with annual revenue in excess of half a trillion naira and asset base of over N400 billion. He ended the 2017/18 financial year with impressive earnings credentials – a 54% lift in after tax profit from a 3.5% increase in group revenue and a 15% drop in total assets. Reinforced ability in converting assets into revenue and revenue into profit was a clear demonstration of managerial competence in leading the large organisations. 

The ability to shield company operations from the difficulties of the operating environment and keep it growing is the hallmark of good management quality. It was testimonies all the way for Gbedebo and his management team at Flour Mills for the last financial year ended March 2018.

The group’s large food business performed in line with targets and delivered anticipated results on both top and bottom lines. The food products – flour, pasta, noodles, edible oil and refined sugar account for 80% of sales revenue. The company is driving a backward integration programme in sugar production and is also building a big capacity in its edible oil business.

The performance of the company’s agro-allied business – animal feeds and fertilizer, reflect both promising growth and profitability. Impressive results also came from the group’s packaging materials business where the subsidiary continues to maintain a leadership position.

Gbedebo explains the facts behind the company’s remarkable performance in the past financial year. “This was achieved through a combination of resilience in the face of a challenging environment, volume growth and product mix from our food and agro-allied businesses”, he said.

Economy of scale and synergy are the key operating advantages for the group. The results obtained, the FMN’s boss said, are a clear indication that efforts in pressing for efficiency and exploiting synergy in the group are yielding the expected results.

The company is planning big in the agricultural space by aligning with the agricultural promotion policies of governments at federal and state levels. It has invested heavily and is still investing in the agro-allied business. Its strategy is to expand its portfolio in the agro-allied space to grow the local content. While consolidating its position in the business, it is committed to leading the growth of the sector, according to Gbedebo.

Flour Mills has made large investments in backward integration that is empowering local farmers, creating jobs and helping to reduce dependence on raw materials imports. Its investments in sugar production are expected to reduce Nigeria’s sugar imports.

It has enhanced the operating capacities of its subsidiaries driving these initiatives through recapitalisation. Gbedebo considers this as a confirmation of his company’s commitment towards profitable growth of these enterprises in the future.

The company’s 10,000 hectare farm development at Kaboji, Niger State, has become a centre of excellence for seed and best agricultural practices in maize and soybean production, he said. The company uses the soybean produce from the farm at its animal feed mills in Ibadan and Calabar.

The Gbedebo-led management of Flour Mills engaged a new financial management strategy last year to deal with the big impact of huge interest expenses on the bottom line. In the preceding financial year, interest expenses consumed close to 79% of operating profit. In the March 2018 financial year, management prevented finance expenses from rising and consequently lowered the ratio to about 67%. This move accounted largely for the strong profit growth recorded in the year.

The company made this happen by reinforcing its capital base through a rights issue and thus deleveraged its balance sheet. It cut down its balance sheet debts from N242 billion at the end of its financial year in March 2017 to N153 billion at the end of March 2018. The debt figure went down further to N141 billion at the end of the company’s second quarter operations in September 2018. Finance expenses have also dropped by 31% year-on-year at the end of the second quarter.

The developments have given Flour Mills increased operational and financial flexibility to drive business growth, make greater impact in the economy and improve returns to shareholders. The company has maintained stable growth in sales revenue over the past three years and has remained consistently profitable with regular dividends to shareholders.