In a year blighted by the pandemic that ravaged businesses and caused a halt in economic activities, revenues of leading food manufacturing firm, Honeywell Flour Mills rose to an all-time high, thanks to firm’s strategy that helped improve output and optimise cost.
The food maker grew revenue to N105.59 billion in the financial year-end 2021, an increase by 36 percent from the N80.45 billion recorded in the previous year.
The growth in revenue in the period could be attributed to improved performance from the first business segments particularly its Apapa business segment where the firm manufactures products like Flour, Semo, Wheat meal, Brown Flour, and Baker’s Delight Flour; as well as its Sagamu segment, where it produces Pasta.
Revenue from the Apapa and Sagamu business segments of the firm rose 31.23 percent and 105.36 percent to N80.02 billion and N19.08 billion respectively. This helped to cover up for the marginal decline in the revenue from its Ikeja business unit, which fell to N5.49 billion in 2021 from N6.37 billion in the previous year.
Due to the increase in production activities, challenges with forex and COVID-induced disruptions in global trade which affected the sourcing of raw and packaging materials, Sales cost increased to N93.97 billion in the period from N66.59 in the previous year. Similarly, administrative expenses rose slightly to N2.57 billion in the period from N2.44 billion a year earlier. Meanwhile, the firm was able to cut down selling and distribution expenses to N5.54 billion from N6.04 a year earlier. Interest on borrowings and overdraft was also up by 43.57 percent to N6.07 billion from N4.23 billion a year earlier.
Nonetheless, the consumer goods firm was able to record abrupt growth in its bottom line, helped by income from the sales of by-product, gains from a property sale, sundry income and debts recovered from customers, all of which raked in N140.71 million in the period, compared to N116.21 million generated in financial year-end 2020.
The profit of the firm nearly doubled to N1.13 billion from N650.49 million in 2019. The abrupt growth in profit in the period helped in increasing the firm’s Earnings Per Share (EPS) to 14.20 kobo from 8.18 kobo in the previous year.
The firm’s total assets were up to N147.39 billion, raising net assets by 1.2 percent. Shareholders’ fund was up also slightly to N57.97 billion. This took the firm’s Return on Equity (ROE), a metrics that measure a firm’s profitability with stockholders’ equity, to 1.94 percent from 1.13 a year earlier. The firm’s return on asset also improved slightly to 0.8 percent in year-end March 2021, up from 0.5 percent in 2020.
Unlike other firms in the industry which run a January – December financial year, Honeywell flour Mills begins its financial year in April and ends it in March the following year.
The firm has proposed to pay a dividend of 7 kobo per share which is up by 75 percent compared to the 4kobo paid the year earlier.
Speaking on the result performance of the firm, Lanre Jaiyeola, managing director, Honeywell Flour Mills, Plc., said: “In an extremely challenging year caused by unprecedented global disruptions and uncertainties, we achieved 36% revenue growth and record-breaking success through sheer grit and doggedness of our workforce.
According to him, the management has worked collaboratively towards the execution of our goals; improved production and cost optimisation, guided by a clear strategy and common purpose. We remain committed to ensuring the supply of affordable nutritious food products to Nigerians, and we continue to assure our shareholders of long-term profitable returns from Honeywell Flour Mills Plc.”
He further explained that the future of the business would be shaped by continued investment in innovative product development, advanced technology infrastructure and operational efficiency.
This is evidenced by the efficient utilisation of its world-class factory in Sagamu, Ogun State which boasts an annual Pasta production capacity of 138,600 Metric Tonnes and contributed over N19 billion to the company’s overall revenue in the 2021 financial year, its second year of operations. The company will continue to improve its product offerings to exceed consumers’ expectations, increase market share, and deliver value to shareholders.
