Production Costs Push Honeywell Flour Into 2022 Full-Year Loss

Honeywell Flour Mills Plc, the latest acquisition by Flour Mills of Nigeria Plc, in an N80bn deal, on Monday presented its audited financials for the full-year ended March 31, 2022, showing a slip into loss, despite the 24% growth in sales revenue for the period, arising from an increase in production costs that could not be mitigated by other income, even as financial cost dropped marginally. The loss after tax of N983.812m, from the previous year’s N1.125bn profit translated to a loss per share of 12.41 kobo from the prior year’s 14.2 kobo, following which the directors are unable to recommend a dividend for the period, a decision it said is “in order to conserve funds.”

Details of the audited financials showed that revenue, all of which came from the domestic market, grew from N109.594bn to N136.427bn, while cost of sales rose by N30.886bn or 32.87% to N124.86bn, compared to the previous year’s N93.973bn. A breakdown of the revenue and cost of sales showed that the company’s Apapa factory accounted for N108.812bn and N99.558bn respectively, compared to N85.018bn and N73.299bn in the prior year; followed by Sagamu with N19.987bn and N18.313bn, up from N19.083bn and N15.975bn in 2021.

A further breakdown of the cost of sales showed that raw and packaging materials gulped all of N111.438bn; compared to N82.662bn; while plant maintenance and post costs followed with N4.972bn, against the previous N3.696bn; and depreciation from N4.279bn to N4.809bn. Gross profit for the period, therefore, dropped from N15.621bn to N11.567bn.

Other operating income more than doubled from N140.712m to N338.819m, lifted by the sales of by-products, which rose to N294.052m from N83.969m; selling and distribution expenses fell from N5.543bn to N4.536bn; while general and administrative expenses rose marginally to N2.687bn from N2.572bn; leaving an operating profit of N4.681bn; compared to the previous N7.646bn.

Finance income stood at N633.897bn, from nil in 2021; just as finance costs, being interest on borrowings and overdraft dropped to N5.487bn from N6.069bn; due to which loss after tax stood at N172.141m from a profit of N1.576bn. The net loss level increased further due to the jump in income tax expense from N450.826m to N811.671m.