The jump of 64 per cent in financing cost affected the profitability of Honeywell Flour Mills Plc(HFMP) for the year ended March 31, 2018. Although the company recorded a growth of 34 per cent in revenue, it ended the year with a marginal growth of 2.8 per cent in profit after tax. However, the board of directors recommended a dividend of N476 million, which translates to six kobo per share.
An analysis of the audited results of HFMP showed that it recorded a revenue of N71.476 billion in 2018, up by 34 per cent from N53.228 billion in 2017. In line with the high cost of doing business in the country, cost of sales increased from N40.5 billion to N55.422 billion. Gross profit stood at N16.052 billion, up from N12.713 billion the previous year.
Other income fell from N1.212 billion to N202 million. The company tried and reduced administrative expenses from N2.243 billion to N2.059 billion. However, finance cost jumped by 64 per cent from N2.792 billion to N4.605 billion.
Consequently, profit before tax stood at N5.469 billion, compared with N4.872 billion, while it ended with a profit after tax of N4.427 billion as against N4.305 billion. The board has recommended a dividend of N476 million, which is six kobo per share and the same paid last year.
Addressing shareholders last year, the Chairman of HFMP, Oba Otudeko, said the improved performance for 2017 year stemmed from relentless focus on lower cost sourcing for raw materials and foreign exchange and increased efficiency in manufacturing.
â€œOur results show continued growth and a substantial step-up in profitability despite the volatile economic environment. It was achieved largely through improved efficiency. Our manufacturing function drove further efficiencies through continuous improvement projects that enhanced engineering and plant maintenance processes and ensured higher levels of production efficiency,â€Otudeko said.
He assured shareholders of the board and managementâ€™s dedication, diligence and commitment to the companyâ€™s mission, which is to produce consistently good quality flour and other wheat based products for the complete satisfaction of its highly valued customers and consumers.
Also speaking, Managing Director of the company, Mr. Lanre Jaiyeola, noted that the company was making significant changes to its business in order to lay a better platform for the years ahead.
â€œIn FY2018 and on the heels of an improving economic environment, we expect to record further improvements in performance, reigniting our growth agenda and extracting increased efficiency and cost reduction through a recently launched company-wide transformation and continuous improvement programme,.â€ Jaiyeola said.