…………achieves significant increase in production capacity over 11 years
Its financials The financial performance of Honeywell Flour Mills plc, using its un-audited income statement for half year ended September 30, 2009 indicated that its turnover grew from N14.5billion in the corresponding period in 2008 to N17.8 billion in 2009. Also, Profit Before Tax (PBT) increased from N493 million in 2008 to N1.62 billion for the corresponding period in 2009. The Profit After Tax (PAT) also indicated a 220 percent increase from N258 million in 2008 to N828 million in 2009. The Profit After Tax was significantly affected by a deferred tax charge of N388 million. The company admitted that the 2008 / 2009 operating environment was challenging for all, and has done well to have not only weathered the storms but also offer shares of its healthy flour mill franchise to investors. Some of the factors that also affected the company’s performance include the exchange rate volatility, the global economic crisis and subsequent dwindling of public and private sector spending and revenues. The financial performance of Honeywell Flour Mills Plc were enhanced by the reduction in energy costs, occasioned by the commissioning and deployment of the Gas Plant in the production facility of the Flour Mills business; increase in margins from additional volumes in Semolina and the new wheat meal businesses, increase in overall volume and turn-over, and efficient cost saving mechanisms the company deployed. The company promised its stakeholders that the current levels will be sustained in the remaining part of the financial year.
NSE listing The 7,930,197,658 ordinary shares of 50 kobo each of Honeywell Flour Mills Plc were last month Tuesday, October 20, 2009 successfully listed on the floors of the Nigerian Stock Exchange at N8.50 kobo per share. Eagerly anticipated by the nation’s capital market community, the Honeywell Flour Mills listing boosted share trading activities on the exchange and shored up investor confidence in the financial markets. “This is surely going to add significantly to the vibrancy and capitalisation of the nation’s stock market,” a top official of the Nigeria Stock Exchange (NSE) commented. When Honeywell Flour Mills Plc, a member of one of Nigeria ’s most reputable indigenous conglomerates, Honeywell Group announced that it was going to the capital market to raise funds in December 2008, the level of skepticism was quite palpable. Even incurable optimists were of the opinion that it was probably not a smart move, what with the investor apathy at the time. However, the company was undaunted and this resolve was rewarded as the successful foray into the capital market was capped by this latest development (the listing).
Initial public offer Not a few market watchers will recall that in December 2008, Honeywell Flour Mills Plc offered for sale to the public 1,252,941,177 ordinary shares of 50k each at N8.50 per share and for subscription 941,176,471 ordinary shares of 50 Kobo each at N8.50 per share. The offer, opened from December 3, 2008 to January 21, 2009 was packaged by some of the leading issuing houses in Nigeria , led by FBN Capital Limited and BGL Plc. According to Babatunde Odunayo, executive vice chairman/CEO of Honeywell Flour Mills Plc, “the success of the IPO was a testament of the confidence the markets reposed in the company. The IPO came at a time the market was down, investor apathy was at its peak, but we were strong in our resolve that the capital market is still the best opportunity for companies to raise funds. This we think has been a worthwhile effort.” It will be recalled that in August 2009, Honeywell Flour Mills Plc notified the public of the successful allotment of shares purchased during the initial public offer. The allotment showed that the Offer for Sale had 1,170,065,959 Ordinary Shares of 50 Kobo each indicating 93.4 percent success while the Offer for Subscription had 930,199,658 Ordinary Shares of 50 Kobo each, translating to 98.8 percent success. The IPO was thus hugely successful and this could partly be attributed to the firm belief in the Stock Exchange by Ayoola Oba Otudeko, chairman of the Honeywell Group, a leading industrialist, an amiable business man and the immediate past president of the governing council of the NSE. Honeywell Flour Mills Plc acquired a 100 percent ownership of Honeywell Superfine Foods Limited, as part of its strategic forward integration process. Honeywell Superfine Foods is a major player in the noodles and pasta market in Nigeria .
The journey, achievements over 11 years Honeywell Flour Mills Plc started in the year 1985 as Gateway Honeywell Floor Mills Limited. In the year 1995, it changed its name to Honeywell Flour Mills Limited. In 1998, the company constructed 200 metric tones per day wheat mill at the Tin Can Island site. Also in the same year, the sale of Honeywell Superfine Flour commenced. In 1999, its milling capacity increased to 360 metric tones per day. In 2001, the company’s milling capacity increased to 610 metric tones per day. In 2004, the company received Nigeria Industrial Standards (NIS) Award from Standard Organisation of Nigeria (SON) for quality of flour. In 2005, milling capacity increased to 1610 metric tones per day. In 2006, the company received Nigeria Industrial Standards (NIS) ISO 9001:2000 QMS Certification. In 2008, Honeywell Flour Mills Plc acquired Honeywell Superfine Foods Limited, a major player in the noodles and pasta market in Nigeria . In 2009, Honeywell Flour Mills had its Initial Public Offer (IPO) and the Nigeria Stock
Exchange (NSE) listing. All these are indications that Honeywell Flour Mills Plc has achieved significant increase in its production capacity over the last 11 years, with ample opportunity for further growth. The company, which currently engages in the production and marketing of flour and flour products, is one of the flour milling companies that control about 75 percent of the market of wheat flour market in Nigeria . Its market share is about 18 percent with not fewer than 22 mills in Nigeria .
Looking at HFM business and marketing strategy Honeywell Flour Mills Plc promised to stay focused on its strategy of providing a wider range of quality products in the food sector for the complete satisfaction of its valued customers. This strategy has seen it expand its product offerings. In 2009, the company has introduced Honeywell Whole Wheat Meal and Honeywell Spaghetti and Macaroni in addition to its other time tested products like Honeywell Superfine Flour, Honeywell Semolina, Honeywell Brown Flour, O! Noodles, O! Snack. Looking into the future, Odunayo highlighted three growth mechanisms. One of them is cost reduction through continuous integration of the Honeywell Superfine Foods business, which will continue to provide revenue and costs synergies, and the planned investment in Gas plant by Honeywell Superfine Foods Limited, which will save energy costs. Another growth mechanism is improving product quality through qualitative research and development to produce more attractive and better quality wheat and grain based products. Expansion of the Semolina business production capacity is the third pillar of this expected growth. “Our strategic direction remains focused on providing a wider range of quality products in the food sector for the complete satisfaction of our valued customers,” Odunayo remarked.