Improved strategies, input cost management, ascribed for Honeywell’s improved financials
by CALEB OJEWALE
October 20, 2017 | 12:50 am| | | Start Conversation
Honeywell Flour Mills has ascribed improved strategies in the company’s management, as well as that of input costs for the company’s positive financial results this year. This, despite the challenging operating environment occasioned by the economic recession which saw consumer spending impeded.
The company’s audited results for this year; show HFM recorded revenue of N53.2 billion in 2017, an increase of five percent from N50.9 billion recorded in 2016. This increase in revenue was achieved despite the general decline in consumer spend due to macroeconomic headwinds experienced nationwide in 2016.
The positive result according to a statement by HFM is “due to some forward looking strategies aimed at input cost management and efficiencies in the overall supply chain management process adopted by the company, as a result of which cost of sales fell by 13 percent.”
Lanre Jaiyeola, managing director of HFM while commenting on the company’s performance said, “These results were achieved as a result of our determination to exceed the expectations of all stakeholders. Despite a challenging environment, we focused on delivering superior quality products to our wide-ranging customers in the retail and wholesale segments whilst leveraging our route to market capabilities which we continue to invest in. In addition, we took a very conservative approach to costing and also leveraged government policies targeted at helping the manufacturing sector during the forex crisis.
“Our management team is making significant changes to our business in order to lay a better platform for the years ahead. Therefore, in FY2018 and on the heels of an improving economic environment, we expect to record further improvements in performance, reigniting our growth agenda and extracting increased efficiency and cost reduction through a recently launched companywide transformation and continuous improvement program.”
Also speaking at the company’s recently held AGM, Oba Otudeko, Chairman of HFM, said the company’s current performance indicated a leap from the results of the financial year 2016. He attributed the improved earnings and profits to the company’s relentless focus on lower cost sourcing for raw materials, foreign exchange and increased efficiency in manufacturing.
The company’s statement which highlighted financials from its audited results, noted that, cost of sales declined from N46.5 billion to N40.5 billion. Other income improved from N157.970 million in 2016 to N1.212 billion in 2017. Selling and distribution expenses fell by 23 per cent from N4.447 billion to N3.418 billion in 2017. This was achieved as a result of management’s execution of tactical initiatives in the company’s supply chain, sales and marketing functions to improve cost-to-serve metrics across modern trade and informal market channels in all business segments of the company.
However, net finance costs jumped from N819 million to N2.792 billion, due to increased working capital requirement and the company’s ongoing expansion in Sagamu, Ogun State. But the company said it was considering several strategic options to better manage finance costs going forward.
The increase in cost of finance notwithstanding, the company ended the year with profit before tax of N5.469 billion, compared with a loss of N2.869 billion the previous year. Similarly, profit after tax stood at N4.304 billion as against a loss of N3.023 billion in 2016. Also, shareholders funds soared by 219 per cent from N16.362 billion to N52.334 billion in 2017. Consequently, the company declared a dividend of six Kobo per ordinary share to the shareholders, which was approved at the AGM.
According to Otudeko, “In FY2017, we reaped the benefits of a well-executed input cost management strategy. Our results show continued growth and a substantial step-up in profitability despite the volatile economic environment. It was achieved largely through improved efficiency. Our manufacturing function drove further efficiencies through continuous improvement projects that enhanced engineering and plant maintenance processes and ensured higher levels of production efficiency.”
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