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National Four Milles

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Background Info: • 100% of NFM grains (bran additives, wheat, corn) are imported, primarily from suppliers in the USA. • Operate locally, regionally and internationally o In the local market, especially for flour and feed, supply is greater than demand; o In regional export markets, especially for feed, supply is also greater than demand; o In the international export market however, supply equals demand. • In Trinidad and Tobago there is one other flour mill – Nutrimix Group of Companies which competes with NFM in the flour market. On a smaller scale, there are also imported brands of flour on the T&T market. • NFM enjoys a market share of approximately 70% in the domestic flour market.

Profitability Analysis • Flour is a staple, inelastic demand. So revenue remained relatively stable between 2010 and 2011, however rising COS without a similar increase in price led to a deterioration of NFM’s profit position in 2011. This trend was evident in flourmills around the globe.

Net Profit Margin
In 2009 and 2010 NFM earned a stable net profit margin of 4% (or 4 cents profit per dollar earned). This decreased significantly in 2011 to 0.6% (or less than 1 cent profit per dollar earned). This was mainly due to the increase in COGS due to high wheat and corn prices on the world market. 100% of NFM grains (bran additives, wheat, corn) are imported, primarily from suppliers in the USA. This is a similar trend observed in flourmills around the world. For example – Liberty Flour Mills located in the Philippines experienced a significant change in net profit margin between 2010 and 2011 – from 16% down to 9%.

Gross Profit Margin
Between 2010 and 2011, gross profit margin dropped significantly from 21% to 15%. This was mainly due to the increase in COGS due to high wheat and corn prices on the world market. 100%

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