Beta Glass Plc, one of Nigeria’s glass makers, has provided shareholders with a larger return on their investment inform of dividend and share appreciation.
Little wonder the glass maker is among the thirty most capitalized firms-NSE 3O firms- in Africa’s largest economy. It was one of the best performing stocks in 2017, having outperformed the Nigeria Stock Exchange All Share Index .Its share price has return 32.15 percent since last year, to close at N67 as of January 4, 2018.
While other manufacturers capitulated to the recession of 2016 as they were unable to make profit, Beta Glass thrived, as it recorded the strongest margins in that period. See Charts.
The company attributed the stellar performance to the price adjustments, exposure to the export market among other strategies that added impetus to revenue and profit.
It has a free cash-flow of N3.93 billion as at September 2018, which means it has the financial strength to pay its debt, fund future expansion plans and pay dividend without having to sweat retained earnings.
Financial Performance for Q3 2018
Beta Glass’s sales increased by 28.98 percentage to N29.18 billion in September 2018, this compares with N14.87 billion recorded in the corresponding period of (Q3) 2017;The uptick at the top line was driven largely by price increases in response to inflationary trends and partly by volume increases in order top offset the rising input costs.
The company made N180.09 million in foreign exchange gains in the period under review, owing principally to its consistent export sales to Cameroon, Cape Verde, Gambia, Ghana, Guinea, Liberia and Sierra Leone.
Gross profits were up 44.42 percent to N4.660 billion in September 2018, the highest since 2015 as the company continues to manage direct costs attributable to projects.
Operating profit otherwise known as Earnings before Interest and Tax (EBIT) spiked by 86.42 percent to N4.16 billion in September 2018, eclipsing 2016 all time high of N4.0 billion.
Profit before tax was up 58.23 percent to N5.19 billion as at September 2018, exceeding 2016 all time high of N4.25 billion.
Profit after tax followed the same growth trajectory as it increased by 50.22 percent to N3.35 billion in the period under review, a marked improvement from the record level of 2016.
Cost of sales were up 24.74 percent to N14.52 billion as at September 2018 as against N14.87 billion as at September 2017. Input costs are higher than the 11.28 inflation figure, and the company attributed the uptick in cost of production to increase in material costs.
However, the glass maker is spending less on input cost to produce each unit of product as cost of sales ratio fell to 75.57 percent in the period under review from 78.27 percent the previous year, and the lowest since 2015.
Beta Glass has been able to turn each Naira invested in sales into higher profit while contemporaneously utilizing the resources of shareholders in generating higher profit.
Gross profit margin increased to 24.29 percent in the period under review, higher than the 21.67 percent, 22.23 percent and 24.04 percent recorded in the corressponding period of 2017, 2016 and 2015.
Net profit margin increased to 18.40 percent in September 2018 from 15 percent the previous year. An 18 percent profit margin indicates the company earns 18 kobo in profit for every Naira it collects.
EBIT Margin increased to 21.68 percent in the period under review from 16.57 percent the previous year.
Experts say Beta Glass impressive performance amid a tough and volatile macroeconomic environment validates management and board of directors’ focus and market penetration strategies.
Dwindling purchasing power among consumers, insecurity in the northern part of the country, decrepit infrastructure, high incidence of smuggling, counterfeiting locally manufactured products, and the menacing grid lock at the Apapa Ports have made it practically difficult for manufacturers to make profit or bolster margins as amid sky high cost of production.
Other challenges bedeviling the industry are: high excise duties on products, exorbitant cost of haulage, and congestion at the Lagos seaports arising from the non-functionality of other seaports in the country.
Historical Background
Beta Glass is a subsidiary of Frigoglass Industries Limited, exporting glass packaging materials to 13 countries. The company has manufacturing plants in Ughelli, Delta State, and Agbara, Ogun State, with three furnaces that exceed 600 tons of produced glass containers per day.
Breweries account for 43 per cent of its total glass unit sales while soft drinks constitute 29 per cent. Wine and spirits make up 12 per cent just as pharmaceuticals and cosmetics’ patronage is estimated at 16 per cent.
Frigoglass to Invest €25-30 Million at the Beta Glass Guinea Plant
Frigoglass, manufacturer in commercial refrigeration and West Africa’s leading glass producer announces today that it will invest €25-30 million to expand its furnace capacity at the Beta Glass Guinea plant, located in Agbara, Ogun State.
The investment will increase capacity at the plant by 35,000 tons per year. It includes a new furnace which will replace an existing one which has reached the end of its life, an additional production line, upgrades to existing production lines, as well as, new quality inspection equipment to strengthen the plant’s capabilities.
This strategic investment will drive continued growth in the company’s Glass business across the West African region. The new furnace, with an expected productive life of more than 12 years, demonstrates the commitment to both existing and new customers across West Africa.
BALA AUGIE
