Honeywell Flour Mills Plc (HFMP), has declared a profit after tax of N2 billion in its nine months financial year result. The figure indicates an increase of 18%, from N1.7 billion in the same period in 2012
Company revenue rose to N41.03 billion or 24% within the period under review against N33.04 billion achieved in the corresponding period.
A statement from the company said the rise in revenue is due to increased production capacity of the company, having recently added 1,000 metric tonnes via two new mills. It said also that gross profit rose to N7.76 billion, from the N5.48 billion in 2012.
The growth in gross profit was attributed to the company’s ability to manage input costs that resulted in a slower increase (relative to revenue growth) in the cost of sales.
Other results include operating costs, which rose by 42% per cent from N3.04 billion in 2012 to N4.33 billion in 2013, was due to increased overheads necessary to operate the expanded production capacity, rising finance costs and increased marketing expenses needed to maintain brand equity, to increase consumer awareness and increase product visibility.
It however explained that rising finance costs had an adverse impact on profitability as the company fulfills its obligations on the debt component of funds used to finance the additional production capacity, noting that the management of the company is currently exploring several strategic options to reduce this cost.
It stated that insecurity in some Northern states and growing infrastructural deficits especially bad roads and poor power supply, has continued to pose serious challenges to the smooth operation of HFMP’s activities, even as the Management expressed confident in the company’s ability to continue to thrive within the tough operating environment.
The company stated that the expansion activities, contributed to the growth of the Company‘s total assets from N55.4 billion as at March 2013 to N66.2 billion as at December 2013, a 20 per cent increase.
The HFMP recently announced that it has commenced the development of the Honeywell foods and Agro-allied complex in Sagamu,Ogun state where work has commenced on the development of a Pasta plant to increase its current production capacity by about 200 per cent. HFMP is also set to raise the bar in the quality of feed available for poultry and fish in the Nigerian market with the development of an integrated animal feed plant within the complex. Both factories are expected to be completed within18 to 24 months.” It added.
Commenting on the results, the executive vice-chairman and chief executive officer of the company, BabatundeOdunayo, said “the company’s results are in line with our expectation for revenue growth stemming from our recent expansion and as we move closer to the end of the financial year, we expect to record an even stronger financial performance in the final quarter.”
