Transcorp improves profit margins amid monumental challenges

 

Transnational Corporation of Nigeria Plc is slogging through a tough and unpredictable macroeconomic environment and still improving its overall performances.

The company’s earnings before interest and tax (EBITA) margin, which shows how much of Transcorp’s Naira of revenue that translates to profit, increased to 26.77 per cent in March 2017 compared to 24.56 per cent the previous year.

The company’s net income for the first three months through March moved by 24.17 per cent to N1.49 billion; operating profit jumped by 24.62 per cent to N4.22 billion as at March 2017.

Analysts say that high margins reflect corporate strength, effective and well diversified business model, and a powerful brand.

Transcorp’s well diversified income stream paid off as the power segment accounted for 52 per cent of the group’s revenue. Energy sent out moved by 31.52 per cent to N8.22 billion in the period under review as against N6.25 billion the previous year. Total revenue for the month of March were up 19.48 per cent to N15.76 billion in the period under review.

“Transcorp’s resilient performance is drawn from the diversity of our various business offerings,” said Emmanuel Nnorom, President and Chief Executive Officer of the company.

“The closure of the Abuja Airport negatively affected occupancy for our hotel business. However, this was buoyed by top line year-on-year growth in our power business following improvements in gas supply,” said Nnorom.

Despite the monumental challenges the company faced last year such as shortages of gas at its power station from militant attack on oil facilities, and huge debt owed by government, the company has increased power generation.

Nnorom said that Transcorp  assumed ownership of the 1000MW capacity plant on 1st November 2013, with the mission to increase daily power generation from 160MW to 972MW capacity, consistent with its capacity.

“Today, Transcorp Power has increased its available capacity by 525% (about 620MW), and has the long term goal of being responsible for at least 25% of all the power generated within the country,” said Nnorom.

Nnorum said the power sector just increased its available generating capacity to 620MW with the installation of Gas Turbine 15 (GT15).

“We will close out 2017 with a total generating capacity of about 850MW if all goes according to plan,” said Nnorom.

The company plans to conclude the ongoing $100m refurbishment of the rooms and external works in Transcorp Hilton Abuja.

Further analysis of Transcorp’s financial statement shows Trancorp’s times interest cover at 1.76 times earnings as total debt in the balance sheet stood at N97.48 billion.

The company’s share price rose by 88 kobo as at 2:00 pm Wednesday to close at N34.96 on the floor of the Nigerian Stock Exchange.

“We expect to recover the lost ground brought on by the Abuja airport closure in Q2 2017. The reopening of the airport will pave the way for aggressive marketing that will improve traffic and occupancy at Transcorp Hotels. In addition, we expect to see continued improvement in our power sector revenue as gas supply stabilises following the increased capacity of our plant arising from the recent commissioning of Gas Turbine 15,” Nnorom said.

 

BALA AUGIE