18 February 2013

Nigeria: Wheat Tariff - Honeywell Flour Profitability Rises Marginally to N2.54 Billion

Honeywell Flour Mills PLC has announced its nine operating results for 2012 which show profit before tax (PBT) rising marginally by 1% to N2.54 billion.

The profit growth was constrained by the increase tariff on Wheat by the federal government as well as high wheat price in the international commodity market.

In a statement issued on Friday the Company said, "Honeywell Flour continues to invest heavily in marketing to support its brands and this investment has in the short term had an anticipated impact on margins. The high wheat prices at the international commodity markets and increased marketing spend impacted PBT growth. As a consequence, PBT only grew by 1% from N2.52 billion. We expect this to improve in subsequent periods as the benefit of the spending on brand support leads to further growth in revenue and PBT.

The Company recorded 18 per cent growth in revenue which rose to N33 billion from N27.9 billion in achieved in the comparable period of 2011. This the Company attributed to strong sales of its consumer products.

"Despite operating in an increasingly tough economic environment occasioned by significant input cost pressure, Honeywell Flour experienced strong growth in all its product categories and its Management was able to ensure that resources were prudently managed.

"The company also declared a nine-month turnover of N33 billion arising from sales of its much beloved consumer brands including .Honeywell Semolina, Honeywell Wheat Meal, Honeywell Noodles, Honeywell Spaghetti, Honeywell Macaroni, and Honeywell Superfine Flour.

Honeywell Flour will sustain its investments in marketing as the Company has seen and continues to see the benefits of the marketing as evidenced in its high turnover growth rate.

Honeywell Flour Mills Plc in the last quarter of 2012, completed its capacity expansion project, taking its installed milling capacity from 1,610MT/day to 2,600MT/day with the installation of state-of-the-art production facilities at its Tin Can Port, Apapa location.

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