Honeywell Flour Mills Earnings Plunge over Rising Costs
Honeywell Flour Mill Plc’s earnings record for the financial year 2023 was battered by foreign exchange losses which drove the company’s finance costs higher. The company lost more than N4 billion to fx related transactions in its following naira devaluation.
With inflation on the street, other costs adjusted upward and the company has limit to raise prices without hurting demand. Though revenue expanded, demand for the company’s products slumped as management hiked the prices of its products.
Even, Flour Mills of Nigeria (FMN Plc) was faced with similar issues. FMN earnings plunged for the same issue, according to its financial scorecard reviewed by MarketForces Africa.
Its pretax profit was negative at about N9 billion while the company claimed deferred tax credit to reduce its poor performance. In reaction to the unimpressive performance, equities investors placed a low price on the company stock.
The company’s share price declined by 8.11%, according to data from the Nigerian Exchange.In 2023, the company’s board of directors failed to declare dividends for shareholding in an effort to conserve the company’s funds. Honeywell did not also pay dividends in 2022, according to its financial scorecard.
In its first audited financial statement after its acquisition by Flour Mills of Nigeria, the company recorded N12.471 billion loss after its annual profit of N256 million was adjusted for a revaluation loss of N12.727 billion, an increase of 27.81% from N9.757 billion loss reported in 2022.
According to the company’s audited report, revenue surged N147.35 billion in the financial year 2023, representing a year-on-year increase of 10% from N136.427 billion reported in the comparable year 2022.
Despite price adjustments in the consumer goods offerings, Honeywell’s gross profit slumped by 17.63% to N9.528 billion in the period, from N11.567 billion in 2022.
The company however recorded a significant increase in other operating income, which supported its bottom line performance amidst a tough economic environment engendered by various government policies.
Honeywell raked in about N1.64 billion as other income in the period, according to its audited report, from about N339 million a year earlier.
The company also cut selling and distribution expenses by half to ensure its profit performance came strong, but all to no avail.
The audited figure showed that Honeywell’s selling and distribution expenses dropped by 51.4% year on year to N2.203 billion in 2023 from N4.536 billion.
The deal breaker for Honeywell then was a spike in finance costs which surged by more than 80% to N10.061 billion from N5.487 billion in 2022. However its financial income dropped amidst the company’s borrowing spree. Its audited report showed that the company’s gross borrowing printed at N81.20 billion. The company reported about N4.1 billion loss due to naira fluctuation.
Share Ownership
Three entities owned 85.54% interest in Honeywell Flour Mills Plc as of the end of March 2023. The largest shareholdings were split among ECOWISE Horizon Investment Limited (48.45%), Greywise Investment Solution Ltd (29.30%) and Siloam Global Services (7.79%).
Honeywell Flour Mills Earnings Plunge over Rising Costs
