Honeywell Flour Mills skips dividend payout as full-year profits plunge 98%

NIGERIA – Honeywell Flour Mills Plc, a flour-milling company in Nigeria, has resolved to skip dividend payout for the year ended 31st March 2019 following a 98% decline in net profits from US$12.2 million (N4.4bn) posted in the previous year.

According to the company’s audited report for the year ended March 31, 2019, the flour-milling company’s net profit declined from US$12.2m (N4.42bn) in 2018 to just US$0.19 million (N68.4m) in 2019.

The company’s board of directors said it will not be recommending payment of dividend for the immediate past business year even after distributing 6.0 kobo per share as cash dividend to shareholders for the year ended March 31, 2018.

Profit before tax had dropped by 88 per cent from US$13.45 million (N4.87bn) in 2018 to US$1.68 million (N607.8m) in 2019 while earnings per share consequently declined from 55.82 kobo to 0.86 kobo per share.

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The company’s turnover however, rose marginally by four per cent from US$197.35 billion (N71.48bn) in 2018 to US$205.44 million (N74.41bn) in 2019.

The board of the company stated that it did not recommend dividend payment in order to conserve funds, reports Naira Metrics.

Honeywell Flour Mills, which operates two factories in Apapa and Ikeja, had blamed the traffic gridlock at Apapa for increased costs and slowdown in business activities. 

It had noted that selling and distribution costs had grown in line with increased volumes and increased costs associated with transporting finished goods out of its plant at the Tin Can-Island Port, Apapa where there has been a constant traffic gridlock.

Fast moving consumer goods companies have notably cited the unrelenting Apapa traffic gridlock as well as the unchecked dumping of consumer goods in the country to have continually impacted on their financial state.

Wahab Mustapha, analysts at Cordros Capital was quoted saying that the companies are currently operating in an intense competitive environment and “are still suffering from huge importation of some commodities like sugar and flour with the impact of this resulting in general price decline.”

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“Consumers are yet to recover from the over 60 percent depreciation in the value of the Naira over a period of two years. Secondly, inflation level has also doubled. So, the impact of the decreased wealth is impacting consumers’ purchasing power,” he added.

As the companies continue to struggle with declining earnings and thinning profit margins economists have said that the outlook of the sector remains positive on the back of a gradual recovery in the economy.

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