The board of Honeywell Flour Mills Plc has released its much-awaited financial score-card for the year ended March 31, 2018, showing mixed performance, as enhanced revenue growth could not translate into equally robust profit.
The Profit before tax dropped by 11 per cent from N5.469 billion in 2017 to N4.872 billion while tax expenses dropped to N445.313 million from N1.164 billion. This resulting in net profit of N4.426 billion, compared to N4.304 billion, which translated to 55.82 kobo, up from N54.29 kobo.
The decline in profit following the significant drop in other income for the period, while net profit was flat, increasing just three per cent from that of prior year.
The directors, however, proposed six kobo dividend, the same amount paid in the previous year, amounting to N475.811million.
Sales revenue stood at N71.476 billion, an increase of about N16.476 billion or 30.95 per cent from N53.227 billion with the company’s Apapa plant being the highest cash contributor, accounting for N59.134 billion revenue, up from N43.579 billion while the Ikeja plant contributed N12.342 billion, up from N9.648 billion. The company is yet to begin export of its products as all of the revenue was earned domestically.
Cost of sales increased by N14.908 billion or 36.79 per cent from N40.515 billion in 2017, to N55.423 billion. The N44.106 billion of the amount was incurred in Apapa as against the previous year’s N32.523 billion, and N11.317 billon in Ikeja from N7.991 billion; leaving gross profit of N16.052 billion, as against N12.712 billion in 2017, N16.052 billion and N1.024 billion of which came from the Apapa and Ikeja operations respectively.
A breakdown of the cost of sales showed that raw and packaging materials gulped N48.103 billion from N33.597 billion; plant maintenance and power cost dropped marginally to N2.371billion from N2.425 billion; depreciation (cost of sales) stood at N2.535 billion from N2.235 billion; among others.
Other income slowed down to N202.217 million from N1.211 billion, representing a N1.009 billion or 83.31 per cent decline; as the company did not record foreign exchange gain for the period, compared to N1.116 billion in 2017. Sale of by-products rose to N120.193 million from N72.736 million reported in the preceding year while sundry income increased from N22.763 million to N67.858 million.
Selling and distribution expenses increased by N1.299 billion or 38.02 per cent from N3.418 billion to N4.718 billion within the period under review . The administrative expenses reduced marginally to N2.059 billion from N2.243 billion in the previous year.
Operating profit stood at N9.477 billion, compared to N8.262 billion reported in the corresponding period of last year.
Finance income was nil, compared to N934.35 million in 2017 while finance costs grew to N4.604 billion from N3.727 billion, resulting in net finance cost for the period of N4.604 billion from N2.792 billion in comparable period of 2017.
It would be recall that the company’s first quarter result showed an 83 per cent rise in revenue increasing to N18.27 billion, while net profit grew by 537 per cent to N643 million, translating to earnings per share of N8.11kobo.
The managing director of the Company, Olanrewaju Jaiyeola, had assured the capital market community at its facts-behind-the-figure that the management is poised “to do more in terms of managing operating costs and looking forward to better returns on investment.”
He spoke of the company’s investment in backward integration to reduce demand for forex used for importing wheat and in the process drive down cost of production, while increasing capacity utilization from between 80 and 85 per cent and enhancing returns on investment.
He said the management is determined “to sweat out our assets by raising capacity utilization,” which is why the Honeywell Foods and Agro-allied Industrial Complex is being constructed at the Sagamu, Ogun State to enable access to incremental capacity, while using technology to drive the entire business process to optimize returns on investment.