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.
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.
