Honeywell targets 20% industry market share

Honeywell Flour Mills Plc said it is targeting 20 per cent market share in the coming years, up from the current 12 per cent in the industry.

Addressing stockbrokers on the floor of the Nigerian Stock Exchange (NSE), in Lagos at the weekend, the Managing Director of the company, Olanrewaju Jaiyeola, noted that the market share computation is based on the nation’s $1.2billion total wheat import bill for the period.

In a bid to reduce the company’s import dependence and foreign exchange demand, he explained that the firm is gradually introducing local content by substituting with home-grown wheat.

He said that home-grown wheat is already in every Nigerian meal today but in very small quantities, assuring that Honeywell places a high premium on research and development to achieve the target.

Furthermore, he added that the company’s investment in backward integration to reduce demand for foreign exchange (forex) used for importation of wheat in order to reduce cost of production, while increasing capacity utilisation from between 80 and 85 per cent.
This, according to him, would also enhance returns on investment and grow the company.

“The management is determined to raise capacity utilisation, and that is why the Honeywell Foods and Agro-allied Industrial Complex is being constructed at the Sagamu, Ogun State, to enable access to incremental capacity, while using technology to drive the entire business process to optimise returns on investment.

“The first phase of the complex, the pasta plant, would be completed in the first quarter 2018, after which construction of swing mill would commence.”
He also assured that the company enjoys evenly spread acceptance across the Nigerian market, with Lagos and South-West accounting for up to 36 per cent; the northern market contributes 42 per cent; and South East 15 per cent.

He said plans are ongoing to introduce smaller pack of its products into the market, as a way of making them more affordable and further enhancing market penetration.

The management, he said, is also focused on top line growth through innovation and the number of product offerings to the market, which is why an innovation unit has been established in the company.

Commenting on the 2017 audited financials, Jaiyeola said revenue grew by just five per cent to N53.23billion and operating expenses fell by 14 per cent from N6.57billion, even as net finance cost jumped by 241 per cent to N2.79billion.

This, he said, arose from the need to increase working capital following the naira devaluation within the period, need to cash-back letters of credits and the rising bank charges on import finance facilities. Despite these, net profit stood at N4.3billion from a loss in prior year of N3.02billion, translating to earnings per share of 54 kobo.

“The robust growth recorded during the just ended financial year being sustained, judging by the first quarter figures showing that while revenue climbed 83 per cent to N18.27billion and net profit for the period increased by 537 per cent to N643million.”