Beta Glass of Nigeria plc recorded single-digit growth in half year net income as increasing costs continued to pressure profits, analysis of the financial statement shows.
For the first six months through June 2014, the company recorded a 2 percent growth in revenue to N867.71 million from N850.21 million in the same period of the corresponding year HY 2014.
BusinessDay analysis shows that the slow growth at the bottom-line level was caused by accelerating input costs.
Cost of sales increased by 22 percent to N6.09 billion from N4.98 billion as of HY 2013, while cost of sales margin increased to 76.01 percent in 2014, as against 73.31 percent in 2013.
Analysts say that the high production cost may have arisen as a result of high energy cost caused by the diesel oil to power generator for the purpose of production. Furthermore, the unpredictability of the Nigeria environment can also hinder the company’s growth prospects.
However, operating expenses reduced by 14 percent to N746.74 million in HY 2014, as against N657.65 million, thanks to cost reduction.
Direct costs attributable to projects were effectively managed as gross profit rose by 7.33 percent to N1.91 billion in HY 2014, compared with N1.78 billion as of HY 2013.
The ability of company to translate turnover to profit reduced as gross profit margin declined to 10.85 percent in 2014, from 12.57 percent the preceding year.
Net margin, a measure of profitability and efficiency, reduced to 10.85 percent in HY 2014, as against 12.57 percent as of HY 2013.
Top-line performance however was impressive as revenue surged by 18 percent to N8 billion in the period under review from N6.76 billion as of June 2013.
Beta Glass total assets reduced by 5.81 percent to N25.58 billion in HY 2014, compared with N27.16 billion as of HY 2013.
The current ratio, which measures the ability of a company to meet its short-term obligations, was 1.24xs, which is below the 2.1x industry average.
Utilisation of assets to generate profit improved as fixed assets turnover moved to 32.27 times in the review period from 24.89 times the preceding year.
With Nigeria population of over 170 million and her rising middle-class that crave for consumption, it means that Beta Glass has enormous opportunities to tap into and also bolster top-line and bottom-line performances.
Beta Glass was incorporated in 1974, and is based in Lagos, Nigeria. The company is a subsidiary of Frigo Glass Industries (Nigeria) Limited. The company share price closed at N18.85 (Friday, September 12) on the floor of the Nigerian Stock Exchange, while market capitalisation was N9.42 billion.