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Companies

Can Honeywell beat Dangote Flour Mills even with its new 140,000mt capacity plant?

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Lanre Jaiyeola, Managing Director, Honeywell Flour Mills

The Managing Director of Honeywell Flour Mills Plc, Mr. Lanre Jaiyeola has spoken about the company’s readiness to achieve profitability this year, even as they begin the construction of a new pasta production plant designed to process as much as 140,000 metric tonnes of wheat per annum.

Jaiyeola disclosed this while speaking at Honeywell’s annual customers’ forum and awards in Lagos, expressing optimism in spite of the peculiar economic challenges facing the country’s manufacturing sector.

According to him, if the company could survive the severe economic challenges that prevailed in 2017 including high exchange rates, the high cost of raw materials, dollar scarcity and the high cost of borrowing, then it can indeed accomplish more in 2018.

He also noted that the company was able to withstand last year’s recession by refocusing its business model on some key areas which helped to position them for growth.

The recession period is over and like any other business, we were also affected, but because we have a very formidable team and a very strong board, we were able to identify those key areas of the business that can help us position our business on the  trajectory of growth and sustainability.-Lanre Jaiyeola

Speaking further, the firm’s MD disclosed that construction work is ongoing at their new Sagamu pasta plant which has the capacity to produce about 140,000 metric tonnes per annum when completed. According to him, the plant is poised to become a first of its kind in the entire Sub-Saharan Africa region.

He stated that the new plant “will produce pasta using both wheat and local grains. With this high capacity lines, we will provide you with innovative and exciting cuts, shapes and sizes of pasta.”

Meanwhile, the company faces some challenges, including stiff competition From Dangote Flour Mills…

Honeywell will, however, need to overcome some challenges if it intends to achieve the projected profitability this year. One of such challenges is the uneasy access to raw materials, particularly wheat. As Jaiyeola noted the perennial scarcity of local wheat is a major challenge facing the industry. According to him, local farmers are only able to produce about 600, 000 metric tonnes per annum, thereby falling short of the 4.5 million metric tonnes required by the industry every year.

This problem increases the costs of production as more wheat would need to be imported. Note that the unavailability of local wheat is one of the factors that aggravated the effect of the recent economic recession as most manufacturing companies struggled to access forex.

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In the meantime, Honeywell will have to overcome the challenge posed by one of its strongest competitors – Dangote Flour Mills. A subsidiary of Dangote Group, Dangote Flour Mills had recorded a turnover of ₦125 billion in the financial year ended December 31st, 2017 with a profit after tax of ₦15 billion. On the other hand, Honeywell Flour Mills had recorded only ₦53.2 billion in annual revenue for the same financial year ended December 2017, with a profit after tax of ₦4.3 billion.

Honeywell Flour Mills was initially incorporated in 1985 as Gateway Honeywell Flour Mills Limited. Its name was however changed in 1995 following ownership changes. By 2008, it had become a listed company on the floor of the Nigerian Stock Exchange.

The company has a share price of  ₦2.73 as at yesterday’s trading. This is less compared to Dangote Flour Mills’ ₦11.40.

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Appointments

Airtel Nigeria announces appointment of Surendran as new Chief Executive Officer

Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new MD/CEO with effect from August 1, 2021.

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Like MTN, is Airtel Nigeria considering listing?

Telecommunications giant, Airtel Nigeria, has announced the appointment of Mr C. Surendran as the new Managing Director and Chief Executive Officer with effect from August 1, 2021.

Surendran would be replacing the outgoing Managing Director and Chief Executive of Airtel Nigeria, Olusegun Ogunsanya, who has been elevated to the position of Chief Executive Officer of Airtel Africa Plc with effect from October 1, 2021.

According to a report from the News Agency of Nigeria, this disclosure is contained in a statement issued by Airtel on Wednesday, May 5, 2021, in Lagos.

READ: Airtel Africa signs new $500 million loan with Bank of America, HSBC, others

The statement says that Surendran would also be appointed to the Executive Committee (ExCo) as Regional Operating Director, reporting to the CEO of Airtel Africa plc, and onto the Board of Airtel Networks (Nigeria) Limited.

Airtel in its statement said, “Surendran has been with Bharti Airtel since 2003 and has contributed immensely in various roles across customer experience, sales and business operations.

He was the Chief Executive Officer of Karnataka, which is the largest circle in Airtel India, with over one billion dollars in revenue.

Surendran delivered an exceptional performance with significant movement in Revenue Market Share (RMS) over the last few years, currently at 54 percent. He has over 30 years of business experience, including 15 years at Xerox.’’

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Airtel said that Surendran would transition into his new role from June 1, 2021, and spend the time onboarding into the business until July 31, 2021.

READ: Meet the latest billionaires on the Nigerian Stock Exchange

In case you missed it

It can be recalled that a few days ago, Airtel Africa Plc, a leading provider of telecommunications and mobile money services in Nigeria and 13 other countries, announced the appointment of Mr Olusegun Ogunsanya as the new Chief Executive Officer, following the notice of retirement given by the current Managing Director/Chief Executive Officer, Raghunath Mandava, to the Board.

In the notification sent by Airtel Africa to the Nigerian Exchange, Ogunsanya is expected to join the board of Airtel Africa with effect from October 1, 2021.

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Companies

Our First Bank loan is being serviced, reduced by 30% in 2 years – Honeywell Group

The credit facilities accessed from First Bank were granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards.

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Billionaire watch: Oba Otudeko’s stakes in Firstbank and Honeywell are worth N10.3 billion

The Honeywell Group has said that its loan with First Bank is being serviced as the conglomerate had reduced the facility by 30% in the last two and half years.

This was disclosed by the Group via a statement issued on Sunday and seen by Nairametrics.

According to the statement, the company and the bank have had a professional business relationship since 1975, which preceded the group’s investment in the bank over a decade later.

According to the Honeywell Group, the credit facilities accessed from First Bank were granted after due negotiations, with the necessary documentation and in line with regulatory policies and industry standards.

The Group further explained that following agreed terms, its facilities are adequately secured with First Bank with collaterals in place at over 170% of forced sales value and 230% at open market value.

It stated, “In 2015, First Bank under the directive of the Central Bank of Nigeria, drew our attention to a 2004 circular (BSD/9/2004) which requires that insider related facilities must not exceed 10% of paid-up share capital.

Based on this directive we subsequently entered negotiations with the bank to agree on an appropriate repayment structure and the final negotiated position was duly approved by the CBN.

In addition to the above, First Bank, on the directive of CBN, requested additional security in the form of FBN Holdings Plc shares held by the Chairman of Honeywell Group, Dr Oba Otudeko citing a 2001 circular. This was duly provided through an authorisation to place a lien on the shares.”

Honeywell Group has continued to meet all its obligations on its facilities with the bank according to agreed terms and has reduced its exposure by nearly 30% in 2.5 years. The facilities were charged at market rate and the bank continues to earn significant interest therefrom.”

What you should know

  • Nairametrics had reported when the Central Bank of Nigeria directed Honeywell to fully repay its obligations to First Bank within 48 hours, warning that failure to do so would cause the CBN to take regulatory measures against the insider borrower and the bank.
  • The Chairman of Honeywell Group, Oba Otudeko, also served as Chairman of FBN Holdings Plc until he was asked by the apex bank to go along with other directors on Thursday.
  • The apex bank had noted in a letter last Wednesday that First Bank had yet to comply with regulatory directives on divesting its interest in Honeywell despite several reminders.
  • Also, the CBN asked First Bank to forward evidence involving the divestment of interest in Honeywell Flour Mills and Bharti Airtel Nigeria Ltd within 90 days.

Download (PDF, 525KB)

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