Julius Berger, Nigeria’s largest construction company by market value, is poised for growth as it has a pipeline of N462 billion worth of projects. This was stated by Wolfgang Kollermann, its group finance director, at the company’s investors forum held on May 13, 2014, in Lagos.
“The N462 billion value of project at hand excludes the second Niger Bridge project,” Kollermann said, while responding to questions from shareholders at the forum, saying “Nigeria is a huge market for construction companies.”
For the year ended December 2013, Julius Berger’s pre-tax profit surged by 31 percent to N16.22 billion from N12.34 billion in 2012, while revenue rose by 6 percent to N212.73 billion.
One of the reasons for the company’s huge capacity seen in its pipeline of projects is the savvy management of property, plant and equipment (PPE) by the management of the company.
“Our equipments are not fairly use but very new, and there is the availability of equipment on site and not off site,” said the chief finance officer, as “fixed assets investment boost dividends.”
According to the company’s 2013 annual reports and financial statement, fixed assets turnover, which highlights the effectiveness of the Group in generating turnover from investment in assets, was 0.94 times. This signifies the Group’s ability to translate investment in assets to turnover then to profits and subsequently to increase dividends.
The Nigerian government in 2012 awarded Julius Berger, a unit of Germany’s Bilfinger Berger AG (GBF), and RCC Nigeria Ltd, a contract to rebuild the 125-kilometre Lagos-Ibadan Expressway, the country’s busiest road in the Southwest.
Julius Berger also won a contract to rebuild the United Nations building in Abuja, at a cost of N5.1 billion ($32m) same year. The Federal Government recently announced Julius Berger AIMS Consortium as the preferred bidder for the construction of the second Niger Bridge that will connect Delta and Anambra states.
Some shareholders at the forum however expressed worries about the upcoming elections, as a change of government could impact negatively on the company.
Kollermann allayed their fears by saying that J Berger had been in the country for over 40 years and had seen it many times – new governments, and new policies, but “we are not afraid of any political changes.”
The company has declared or recommended a final dividend of N3.2 billion, representing N2.70 to the qualified shareholders for the year ended December 2013.
Based on BusinessDay investigation, this represents a dividend pay-out of 40 percent in 2013, compared with a 36 percent pay-out in 2012.
Total assets increased by 26.94 percent in the review period to N227.26 billion from N179.03 billion at the end of 2012 – thanks to increased investment in new equipment to the value of N23 billion.
In 1965, Julius Berger was awarded a contract to engineer, build and construct a major infrastructure project in Nigeria – the Eko Bridge in Lagos, which was the foundation of Julius Berger’s presence in Nigeria.
Today, the company maintains its role as the premier construction company in Nigeria.
Julius Berger share price closed at N71.91 on May 13, 2014, while its market value was N86.03 billion on the same day. “We are setting the benchmark and we are the leaders in technology,” said Kollermann.
BALA AUGIE
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