HONEYWELL FLOUR MILLS PLC: WELL WITH LITTLE HONEY?

Honeywell Flour Mills PLC looks poised to close the year to March 2016 with little honey in the well if half year figures to September are anything to go by.
According to the results released recently, there has been a slow down of profitable business in the second quarter after a better first quarter to June 2015.
Based on total income within the periods, Honeywell ended the first quarter with N6.84 gain on N100 income compared to N5.94 previously.
By September 2015 however, this had dropped to N4.28, that is below, not above in 1st quarter, the N4.9 by September 2014.
Now because Honeywell then ended that year with only N2.88 gain on each N100 the possibility of even the September 2015 figure slipping to below the march 2015 year end figure exists. More so when by September 2014, the full year's profit was 95.5% earned.
The pressure on the company came from drop in turnover; income from other sources and finance income.
Additional pressure was from higher increase in selling and distribution costs despite decrease in cost of sale.
At N26192m by September, main line turnover had dropped by 2.53% compared to 2.08% decrease in the first quarter.
Cost of sale at N21115m was 5.13% down by half year but this too was lower than 6.09% achieved in the first quarter.
Honeywell's selling and distribution cost increased by 8.10% to N3589m while finance income dropped by 82.5% to N133m to water down the positive impact of 40.7% decrease in finance costs.
SO:
* Only a positive change in last financial year's trend could land Honeywell Flour Mills in higher profit come March 2016.
* Some of such changes could be continued drop in finance costs; recovery in gross profit growth and drop in overheads.

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