11plc’s half-year profit falters on higher cost of sales, finance cost

A double digit increase in cost of sales and a surge in finance cost hit the profit of 11plc (Mobil) in the first half of 2019, according to the company’s financial statement that was made public on Wednesday.

Despite an improvement in the company’s revenue in the period, it reported a profit of N4.173 billion, 23 percent less than it made in the same period last year.

Revenue of 11plc increased by 8 percent year-on-year to N92.81 billion compared to N85.91 billion. Across all segments, income improved and the company noted an inflow of N606 million from sales of Liquefied petroleum gas (LPG), a segment it had exited for two decades but revived last year.

The improvement notwithstanding, direct cost rose faster by 11.38 percent to N85.27 billion squeezing its gross profit which fell by 19.36 percent to N7.54bilion. Top-line was N9.35 billion in H1 last year.

Gross margin, which shows how much 11plc retained from every N100 revenue adjusted for its direct cost, fell from N10.61 in the half-year period in 2018 to N8.33 in the corresponding period this year.

In addition, income from other sources fell by 8.6 percent to N4.05 billion compared to N4.43 billion last year.

The decline in income affected operating profit of 11plc despite a slowdown in its Selling, General and Administrative expenses and an inflow from its other operating income. Operating income fell 17.8 percent to N6.38 billion.