HONEYWELL Flour Mills Plc, a market leader in the Nigerian foods industry, has defied the tough operating environment to record a four per cent revenue growth and total assets of growth of 12 per cent from N67.94 billion reported in 2015 to N76.05 billion.
Asset growth in the review period was largely determined by the company’s capacity expansion projects.
During the year under review, the company recorded a loss for the first time in its 20-year history, amounting to N2.87 billion before taxes. This situation was driven by adverse effects of forex fluctuations which impacted input costs.
Besides, the company has also embarked upon several strategic initiatives to grow revenues and reduce costs. A key revenue growth strategy, according to the company, is anchored on backward integration that will result in the production of more products from locally grown crops.
According to a statement by the company shortly after its Annual General Meeting in Lagos on Tuesday, it stated that “the new state-of-the-art, multi-billion Naira facilities in our foods and agro-allied industrial complex in Sagamu, Ogun State, nearing completion, will go a long way in supporting us to actualise our backward integration plans.”
The company will also continue to invest in new product research and development to enable the production of more varieties of food products for its teeming consumers.
Speaking during the seventh AGM, the Chairman of the company, Dr Oba Otudeko CFR, while reviewing the macroeconomic and operating environment said: “There were series of challenging factors that led to increased uncertainty and rising cost pressures in the Nigerian economy.”
He went further to state that “Consumer spending progressively dropped throughout the operating period under review. Prices of most consumer goods rose sharply in response to higher input costs. In our case, we have only taken modest price increases to ensure our brands remain affordable and to sustain food security.”
He, however, reassured all that the board and management team of the company are determined to do their best to prevent a reoccurrence of this unanticipated dip in the company’s earnings and steer the company back to the path of profitability.
Also speaking at the AGM, the Managing Director of the company, Olanrewaju Jaiyeola said, “The Company developed some strength in operational efficiency in the financial year ended March 2016. We have found even greater strength in controlling costs. We embarked on several strategic projects to reduce cost. One of the most important steps we took was to begin the process of developing local sources and partnerships for raw materials within the context of our backward integration strategy.”
He concluded by reiterating that the company has been able to navigate through this turbulent period by streamlining cost structure while several projects have commenced to entrench continuous improvement and innovations across the business.
A shareholder, Sir Sunny Nwosu, commended the company on the progress of work at the new, ultra-modern Sagamu factory. He described the on-going Sagamu project as a strategic initiative that will help the Company further grow market share; increase revenue significantly and support the realisation of its backward integration strategy.
Shareholders of the company also commended the board of directors and its management for being able to steer the affairs of the company during the financial year ended March 31, 2016, despite the tough economic challenges rocking the country.