Honeywell Flour Mills Plc (HFMP) first quarter profit performance for the period ended June 30, 2019 improved by 6 percent thanks to sales from its pasta products.
This was inspite of finance costs incurred by the company to set up an ultra modern factory for the seamless availability of its products.
As a result of the sales, the Nigerian food manufacturer, said it’s revenue moved up 7 percent to N19 billion, compared with N17.7 billion recorded in the corresponding quarter of 2018.
Lanre Jaiyeola, the company’s managing director said, the revenue growth was driven by sales of its various Pasta products, which led to the continued strong performance of the firm’s B2C business line.
He said, despite the difficult operating conditions in the country, the firm was able to commence full commercial production at its ultra-modern Foods and Agro-allied complex in Sagamu, Ogun State.
At the complex , HFMP was able to grow it’s capacity to meet the increasing demand for pasta products which is evidenced by the impressive 157 percent volume increase, Jaiyeola stated following the firms Q1 earning release.
“The performance in Pasta gives credence to the company’s commitment to continue to expand its footprint into growth areas that will positively impact the long-term sustainability of the business,”he added.
Jaiyeola further explained that the company’s execution of well-embedded savings and efficiency initiatives aimed at improving margins led to a 14 percent drop in selling and administration expenses from N2.2 billion to N1.9 billion.
This translated to the operating profit accelerating at a faster rate than revenue by 52 percent, from N1.02 billion to N1.54 billion.
The growth in operating profit he further explained, “was however moderated by increase in finance expense which was up by 58 percent from N892m in the corresponding quarter of the last financial year to N1.4b.
The growth in finance expense was as a result of the cost of financing the Foods and Agro-allied complex which is now being recognised in the income statement following the commencement of commercial operations. As a result, profit for the period only increased by 6 percent from N102 million to N108 million.
Confident of sustaining an improved performance through the remaining period of the financial year and the future, Jaiyeola noted that “We will continue to execute on our five core strategic pillars through three key drivers of growth, efficiency and capability.
We will also strengthen and expand our business portfolio, generate additional revenue streams by offering new products tailored to consumers’ taste and nutritional needs and we will drive margin improvement by enhancing operational efficiency and developing capabilities to extend product offerings and serve new markets.”