Due to sustained sales losses from its pasta product line, Honeywell Flour Mills Plc‘s turnover plunged by N12.7 billion to N260.8 billion in 2026.
In 2026, pasta sales plummeted by over 60 per cent from N89 billion in 2025 to N35.7 billion, largely due to high prices and reduced purchasing power among Nigerians amidst economic hardship.
In the fiscal year ending March 2026, the company’s financial report indicates that management addressed declining sales by implementing cost-cutting measures, leading to a second consecutive year of improved profitability.
A subsidiary of Flour Mills of Nigeria, the company returned to profit in 2025 after several years of losses, sustaining this turnaround for the second consecutive year.
Despite a drop in sales revenue, the company’s after-tax profit rose by N2 billion (13%) to N16.5 billion, resulting in a cash dividend of 20 kobo per share for shareholders.
Pasta sales are declining due to changing consumer habits, high food inflation, and reduced consumer spending, all of which are shrinking market demand.
Nigerian consumers, facing economic hardship, are switching from expensive packaged foods like pasta to cheaper staples. Inflation-driven packaging costs increase alongside this shift, preventing price reductions, resulting in significant sales volume losses and a worsening market situation.
Further to these is the emergence of intense competition by rival brands, leading to slicing of a generally declining market volume.
However, the company improved profit despite a drop in sales revenue by implementing cost-management initiatives, specifically by achieving savings in two major cost areas.
To offset declining sales revenue, the company lowered its cost of sales. While sales revenue crashed by N12.7 billion or 3.4 per cent, the cost of sales dropped by N16.8 billion or 4.9 per cent.
The favourable balance shifted sales from a decline to a 13 per cent increase in gross profit, increasing to N36.4 billion.
However, operational pressures negated cost savings from reduced production expenses, primarily due to a 2.5-fold increase in selling and distribution costs, which reached N11.4 billion that year.
Other income decreased by 31 per cent to N3.4 billion for the year. This impact was partially offset by reduced administrative expenses and impairment loss on receivables.
Administrative costs dropped by 18.8 per cent over the year to less than N10 billion, while impairment loss on receivables declined from N2.2 billion to N1.9 billion.
Yet, the cost savings could not fully counter the surge in selling and distribution expenses, resulting in a drop in operating results. Operating profit went down from N18 billion in 2025 to N16.6 billion at the end of 2026 operations.
Another turning point in profit enhancement happened in favourable finance income and expenses. While finance income grew from N8.5 billion to N9.2 billion, finance expenses dropped from N5.4 billion to N3.9 billion over the year.
But the company’s borrowings have expanded from under N27 billion in the previous year to N32.5 billion, raising concern whether the drop in finance expenses is sustainable.
Net finance income increased from N3.1 billion to N5.3 billion during the financial year. The development changed the reading from the drop in operating profit to a moderate improvement in pre-tax profit at roughly N22 billion.
Profit improvement was further extended by a drop in income tax expenses from N6.6 billion in the previous year to N5.4 billion in 2026.
After-tax profit grew by 13 per cent to close at N16.5 billion for the 2026 financial year, reflecting an improvement in net profit margin from 3.9 per cent to 4.6 per cent over the period.
Honeywell Flour Mills ended the 2026 financial year with earnings per share improved from N1.84 to N2.08. The directors have proposed a cash dividend of 20 kobo per share to shareholders for the 2026 operations.
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