Honeywell Flour Spikes by 50.8% to N46bn Amidst Free Float Issue

Fast-moving consumer goods challenger Honeywell Flour Mills Plc recorded a sharp increase in stock market price as the local exchange continued to rally strongly in 2024. The company’s market valuation grew by 50.8% to about N46.4 billion, according to data from the Nigerian Exchange, following its earnings plunge.

Its six-month financial results ended in September 2023 showed that Honeywell Flour lost about N4.4 billion, which was a 40% reduction from about N7.4 billion after-tax loss it posted in the comparable period. MarketForces Africa’s review showed there was a decline in the company’s free float, dropping to 14.46% as of September 2023 from 23.25% in the equivalent period in 2022.

The company affirmed the same position in its unaudited financials with a declaration of not being fully compliant with the NGX free float requirement as of Sept 2023 for a company listed on the main board. Details from its unaudited result for the second quarter ended in September posted on the Nigerian Exchange showed substantial shareholdings rose to 85.54% – from 76.75% in the comparable year.

This was due to a 7.79% holding in Honeywell Flour Mills by Siloam Global Services Limited following the acquisition by Flour Mills of Nigeria Plc. The largest shareholder Ecowise Horizon Investment Limited pushed its stake upward marginally to 48.70% while Creywise Investment Solution Ltd.’s interest in the company rose to 29.05%.

Its market price increased from N3.88 to N5.85 at the end of the trading session on Friday on strong volume trade – the company has 7.930 billion shares outstanding. About 5.5 million shares of the company exchanged hands on Friday. The trend appeared to be strong as more than 5 million shares were traded before that. Detail from the midweek trading showed that investors traded more than 9.8 million shares of Honeywell.

Based on their separate outlook for the year, many investment firms remained underweight on consumer goods stocks amidst uncertainties. The third quarter earnings season witnessed unimpressive profit performances by companies operating in the fast-moving consumer goods sector.

Listed registered increased numbers of companies that reported forex exchange losses which reduced their margins.  The devaluation of the Naira impacted Honeywell Flour Mills’ performance in the second quarter ended in 2023. “We are less bullish on the sector due to expectation of continued cost pressure on raw material items due to lingering inflationary and FX illiquidity”, Afrinvest said in its outlook for 2024.

Analysts see Honeywell’s position as an essential product coupled with the potential to drive revenue via an increase in pricing and volume would drive topline in the coming year. The segment is faced with a multitude of challenges.

These include the battle against inflation, foreign exchange (FX) losses attributed to the impact of Naira devaluation, and the consequential outcomes reflected in the various corporate actions. Naira Steadies as Banks Issue Update on FX Purchase

Despite the decline in global wheat prices during the latter part of 2023, Nigerian flour millers continue to face escalating input costs, attributed to the devaluation of the Naira and increased energy expenses that significantly strain the sector, Meristem Securities Limited said in its outlook for the year. #Honeywell Flour Spikes by 50.8% to N46bn Amidst Free Float Issue