NIGERIA – The tough operating environment and naira devaluation affected the financial performance of Honeywell Flour Mills Plc as its profit dipped by 66 per cent to N1.4 billion for the year ended March 31, 2015.
The manufacturer of wheat-based food products, recorded a revenue of N49 billion for the year, showing 11 per cent decline relative to N55 billion achieved in 2914.. The pressure experienced in the top line reflects the intense competition around price war going on in the industry and the falling Naira.
Honeywell Flour Mills Plc declared a Profit before Tax (PBT) of N1.4 billion and Profit after Tax (PAT) of N1.1 billion, down from N4.2 billion and N3.4 billion in 2014 respectively.
According to the company, the performance was affected by several factors including the Apapa traffic gridlock and declining infrastructure around the ports.
“Roads leading to and from Apapa have effectively become car parks. Truck parking facilities around the ports that should have been completed years ago seem to have become abandoned projects.
These problems have compromised our logistics efficiency by frustrating the prompt loading of products resulting in longer loading turnaround times and reduced stock turnover,” the company said.
The Managing Director of Honeywell Flour Mills, Mr. Lanre Jaiyeola, lamented the economic loss arising from the falling Naira, the perennial chaotic traffic and debilitating condition of the roads leading in and out of Apapa.
He said the company’s customers, suppliers, haulage partners and staff demonstrated great courage, loyalty and commitment during these challenging times, noting that it takes, on an average, eight hours for customers to access or exit the factory.
“Added to these, is a rise in dollar denominated input costs. Costs of wheat and spare parts have been rising because of the falling Naira to forex rates. These challenges coupled with weakening macro-economics of the country, means it takes much longer to factor such cost increments into product prices,” he said.
Going forward, he said the company plans to build on some successes recorded in the last financial year, such as the wide acceptance of its new flour brand: Honeywell Composite Flour (HCF), which contains 10 per cent High Quality Cassava Flour (HQCF).
“Honeywell Flour Mills will continue to evaluate opportunities to increase use of local inputs in its portfolio that helps it to reduce its exposure to forex volatility.
Management is implementing new initiatives to improve outbound logistics and service delivery including the operation of off-site warehouses and optimization of its 24-hour loading programme,” he said.