• Thursday, May 23, 2024
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Aluminium Extrusion increases sales by 11.88% as influx of cheap products stifles growth

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Aluminium Extrusion Industries plc, through focus strategy and marketing penetration, has increased sales by 11.88 percent as influx of cheap products into the country stifles sector growth potentials.

For the first six months through June 2014, the Nigeria roofer’s revenue increased by 11.88 percent to N1 billion from N894.91 million the same period of the corresponding year (HY) 2013.

The double-digit growth at the top-line level was achieved amid environmental challenge such as the importation or flooding of cheap products from Asia countries, an unfortunate situation that has been cannibalising the sales of local producers.

Further inhibiting growth are the issue of tax and the high import duties by the Nigeria Customs Service and the delay at the ports that surges demurrage, thus spiking material costs.

Aluminium Extrusion’s cost of production was high as cost of sales increased by 15.83 percent to N889.86 million in HY 2014, from N768.19 million the preceding year as limited power supply continues to spike energy costs.

Furthermore, cost-of-sales margin jumped to 88.87 percent in the review period as against 85.90 percent as of HY 2013.

Operating expenses were up by 10.50 percent to N52.92 million, compared with N47.89 million as of HY 2014. The cost pressured took a toll on Aluminium Extrusion bottomline as profit after tax (PAT) decreased by 44.08 percent to N24.81 million as against N44.37 million.

Government should encourage roofing sheets manufacturers through tax incentives to encourage local producers and also clampdown on illegal importers of inferior roofing sheets.

The Nigeria roofers can also tap into the huge opportunities in the Nigerian economy driven by rapid urbanisation as a result of population explosion, surge in the demand for building materials and the new mortgage refinancing scheme by the Federal Mortgage Authority.

Nigeria with a population estimated at over 170 million, and growing at a rate of 3.5 percent per annum, has a shortfall in the supply of housing units that has been estimated to be between 16 – 17 million.

Furthermore, with an economic growth rate averaging 7 percent per annum in the past five years, Nigeria has witnessed a growth in the number of middle-class families with the associated need to have a home of their own, thereby further deepening the real estate market in Nigeria, hence roofing needs. It should be noted that over 60 percent of the entire population of the country live on rented accommodation, and this indicates another embryonic market for the Nigerian roofers to exploit.

The company’s share price closed at N10.43 billion on the floor of the Nigerian Stock Exchange, while the market capitalisation was N2.29 billion.

BALA AUGIE