Honeywell Flour Mills’ profit declines by 38.7%

Honeywell Flour Mills Plc has declared a profit after tax of N283m for the three months ended June 30, 2015.

The figure was 38.7 per cent lower than the N462m it declared as profit after tax for the corresponding period of 2014.

The company’s results for the three months period, which it filed with the Nigerian Stock Exchange on Monday, showed that its revenue dipped by 2.98 per cent year-on-year; from N13.191bn to N12.797bn, while its profit before tax was down by 32.65 per cent from N585m to N394m.

Basic earnings per share fell by 38.7 per cent from N5.83 to N3.57, while the company’s gross profit rose by 2.6 per cent from N2.255bn to N2.313bn.

Although Honeywell Flour Mills was able to cut its cost of sales by 4.1 per cent from N10.936bn to N10.484bn in the three months under review, it saw a 10.1 per cent year-on-year increase in selling and administrative expenses (2015, N1.728bn; 2014, N1.569bn).

Honeywell Flour Mills had also suffered declines in revenue and profit for the financial year ended March 31, 2015.

The company’s audited results for the year had shown that its revenue fell by 10.95 per cent from N55.08bn in the year ended March 31, 2014 to N49.05bn.

Its profit before tax fell by 66.27 per cent from N4.24bn to N1.43bn, while profit after tax declined 66.57 per cent from N3.35bn to N1.12bn.

In a statement in July, the Managing Director, Honeywell Flour Mills, Mr. Lanre Jaiyeola, blamed the company’s poor performance in the year ended March 31, 2015 on the tough operating environment and naira devaluation.

For instance, he said, “Roads leading to and from Apapa (where the company is located) have effectively become car parks. Truck parking facilities around the ports that should have been completed years ago seem to have become abandoned projects.

“These problems have compromised our logistics efficiency by frustrating the prompt loading of products resulting in longer loading turnaround times and reduced stock turnover.”

As a result, he said it sometimes took customers up to eight hours to access or exit the company.

“Added to these, is a rise in dollar denominated input costs. Costs of wheat and spare parts have been rising because of the falling naira to forex rates. These challenges coupled with weakening macro-economics of the country, means it takes much longer to factor such cost increments into product prices,” he said.

Jaiyeola, however, stressed that the company would “continue to evaluate opportunities to increase use of local inputs in its portfolio that helps it to reduce its exposure to forex volatility. Management is implementing new initiatives to improve outbound logistics and service delivery including the operation of off-site warehouses and optimisation of its 24-hour loading programme.”

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Source : Punch

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