By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Honeywell Flour Mills Plc (Honyflour) operating in the Food/Beverages &Tobacco Sector of the Nigerian Stock Exchange (NSE) is seeking to invest $65 million about (N10 billion) in capacity expansion by building twin Mills.
Folarinmi Babatunde Odunayo, Executive Vice Chairman/Chief Executive Officer (EVC/CEO) of the Company made this affirmation Wednesday at the ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œFacts behind the FiguresÃƒÂ¢Ã¢â€šÂ¬Ã‚Â presentation of Honyflour at the NSE in Lagos Nigeria.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWe are ready to putting up an investment of over $65 million in additional milling capacityÃƒÂ¢Ã¢â€šÂ¬Ã‚Â he said.
According to him, the planned expansion in capacity takes Honyflour to 11 percent (11%) of industry capacity and to about 20% of the Market share. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œ20% Market share in a population of 150 million is a notable Market positionÃƒÂ¢Ã¢â€šÂ¬Ã‚Â Odunayo said.
He further affirmed that the new Mills will allow the Company drive production capacity to higher margin products such as Wheat Meal and Semolina.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe first of the twin Mills is expected to be completed and commissioned in the first half of 2012, this strategic move will enhance the CompanyÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢s ability to withstand the volatility of input costs, such as Wheat, by better matching product prices to fluctuating input costsÃƒÂ¢Ã¢â€šÂ¬Ã‚Â the CEO of Honyflour said.
Also, he said that the second Mill will be completed and commissioned in the second half of year 2012. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œThe new Mills will allow the Company skew production capacity to higher margin products (Honeywell Wheat Meal and Honeywell Semolina); this will create additional capacity for earnings growth and reduce volatilityÃƒÂ¢Ã¢â€šÂ¬Ã‚Â Odunayo affirmed.
In the same vein, Odunayo said that Honyflour will now pay a 13 Kobo per share dividend September 27 2011. ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œConsequently, the Board has recommended a dividend of N1.031 billion, representing 13 Kobo per share, subject to the approval of shareholders at the Annual General Meeting (AGM) on September 26 2011ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â he affirmed.
According to him, the proposed dividend payment represents an increase of 18% when compared with 11 Kobo for the year ended March 31 2010.
A review of the Financial Highlights for the year ended March 31 2011, showed that Profit Before Tax (PBT) grew from N2.33 billion in year 2010 to N3.51 billion in year 2011; indicating an increase of 51%.
Profit After Tax (PAT) more than doubled from N1.18 billion in 2010 end to N2.49 billion in the Audited period ended March 31 2011, showing an increase of 112% in the review period.
Turnover grew marginally from N33.53 billion in year 2010 end to N34.06 billion in the year under review; representing a slight growth of 2%.
Odunayo affirmed that the marginal growth in Turnover was due to limitation in production capacity, ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œas the factory presently runs close to full capacity (greater than 95%), the industry average capacity utilisation is about 40%. This has made factory capacity growth inevitableÃƒÂ¢Ã¢â€šÂ¬Ã‚Â he said.