How Honeywell Flour Mills Lost N983.8m in 2022 Financial Year

In the wake of high inflation and cost of production, Honeywell Flour Mills has recorded a loss of N983.8 million in its 2022 financial year. A decline of 188% from the previous financial year. 

The company disclosed this in its financial statement filed with the Nigerian Exchange Limited (NGX). In the financial statement, Honeywell reported a N172.14 million loss before profit, down from the N1.58 billion profit before tax reported in the 2021 financial year.

The audited results revealed a 34.8% increase in the cost of raw and packaging materials to N111.44 billion in 2022, up from N82.66 billion in 2021. This accounted for 89.3% of the overall cost of sales in the year under review. 

Investors King gathered that Honeywell Flour mill’s profit dropped from N1.13 billion generated from the financial year ended March 2021 to N983.8 million in March 2022, and this was majorly caused by its rising cost of sales. 

Honeywell’s cost of sales grew by 32.9% from N93.97 billion to N124.86 billion. This high cost was a result of the jump in the cost of operation in Sagamu, Ikeja and Apapa factories.

The cost of sales in Sagamu rose by 14.6% to N18.3 billion in 2022 from N15.98bn in 2021. Apapa factory expanded by 36.3% to N99.56 billion in 2022 from N73.02bn in 2021 while Ikeja factory witnessed a significant increase of about 49% in its cost of sales to N6.99bn in 2022 from N4.7 billion in 2021. 

However, the company closed the 2022 financial year with N136.43billion revenue, a 24% increase from N109.59 billion in 2021, largely driven by revenue generated from the Apapa factory. 

Revenue generated at the company’s Apapa operational factory rose by 28% from N85.02 billion in 2021 to N108.8 billion in 2022. 

The Ikeja segment manufactures paste/noodles and the Sagamu segment manufactures Paste, while the Apapa segment manufactures Flour, Semo, Wheat mean, Brown flour and Baker’s delight flour.

On the backdrop of an increase in the cost of sales, the company’s gross profit dropped by 25.9% to N11.57 billion in 2022 FY from N15.62 billion in 2021 FY. Although the management was careful in managing its operating expenses and finance cost, both still dropped by 11% and 9.6%, respectively. 

The board at the meeting held recently agreed to recommend the cancellation of its unissued shares to the shareholders at the next Annual General Meeting in compliance with the provisions of the Companies and Allied Matters Act (CAMA) 2022 and the public notice of the Corporate Affairs Commission (CAC) dated April 16, 2021.