How Honeywell’s Flour Business Offset Noodles Weakness to Deliver N16.49bn Profit, N1.59bn Dividend

Honeywell Flour Mills Plc’s decision to propose a N1.59 billion dividend for the 2026 financial year appears surprising at first glance.

The company reported a 3.4 per cent decline in revenue to N360.85 billion from N373.51 billion in the previous year. Yet profit after tax rose by 13 per cent to N16.49 billion, while shareholders are set to receive a dividend of 20 kobo per share.

A closer examination of the company’s audited financial statements shows that the improved profitability was driven largely by stronger performance in its flour milling operations at Tincan, Lagos, which more than compensated for worsening losses in its noodles and pasta business in Sagamu, Ogun State.

Honeywell operates two major business segments. The Tincan operation produces flour, semolina and wheat meal, while the Sagamu facility manufactures noodles and pasta.

The contrast between the two businesses was stark during the financial year.

The Tincan operation generated revenue of N325.20 billion, accounting for more than 90 per cent of group turnover. This represented a 14.4 per cent increase from N284.20 billion recorded in the previous year.

Profit after tax from the segment rose to N20.92 billion from N16.92 billion in 2025, making it the principal source of earnings for the group.

By contrast, the Sagamu business experienced a significant contraction. Revenue declined to N35.65 billion from N89.31 billion, while the segment reported a loss after tax of N4.43 billion, deeper than the N2.33 billion loss recorded a year earlier.

Without the performance of the Tincan operation, Honeywell would likely have struggled to deliver the earnings growth that enabled the dividend declaration.

The company’s cost profile also helped support profitability.

Although overall revenue fell by N12.66 billion, cost of sales declined by a larger N16.85 billion to N324.42 billion from N341.26 billion in the previous year.

The largest contribution came from raw and packaging materials consumed, which dropped to N291.22 billion from N306.94 billion, representing a reduction of about N15.72 billion.

Freight expenses also declined significantly to N7.29 billion from N10.46 billion, while depreciation charges included in cost of sales fell to N4.91 billion from N5.87 billion.

These reductions contributed to gross profit rising to N36.43 billion from N32.25 billion despite lower revenue.

The financial statements further show that finance costs fell by about 28 per cent to N3.90 billion from N5.43 billion. At the same time, finance income increased to N9.22 billion from N8.54 billion.

The company also recorded lower impairment losses on trade receivables, which declined to N1.90 billion from N2.22 billion.

Administrative expenses fell to N9.97 billion from N12.28 billion. The comparison was aided by the absence of major impairment charges recorded in the previous year, including a N3.26 billion impairment loss on property, plant and equipment and a N5.85 billion impairment of prepayments.

Together, these factors helped offset a sharp rise in selling and distribution expenses, which increased to N11.38 billion from N4.58 billion. Marketing expenses alone rose to N6.31 billion from N1.25 billion, while product development expenses increased to N4.69 billion from N1.42 billion.

The company’s earnings per share improved to 207.9 kobo from 183.96 kobo, reflecting the stronger bottom-line performance.

Honeywell’s balance sheet also strengthened during the year. Total equity increased by 44 per cent to N53.93 billion from N37.45 billion, while retained earnings rose to N24.12 billion from N7.63 billion.

Total assets expanded to N216.71 billion from N167.45 billion, with property, plant and equipment increasing to N99.27 billion.

The numbers suggest that Honeywell’s 2026 performance was shaped less by revenue growth and more by the changing composition of its business. Stronger earnings from the core flour milling operation, combined with lower production and financing costs, enabled the company to absorb weakness in its noodles and pasta segment and still deliver higher profit and a dividend to shareholders.