Beta Glass to consolidate market leadership with $30m capacity expansion
Beta Glass is set to consolidate its position as the market leader in the glass bottles making industry with the completion of $30 million expansion in its Agbara plant in Ogun State, South West Nigeria. The new investment, which was first announced in December 2018, will take its annual productive capacity to 35,000 tons as well as allow the firm to pioneer the Narrow Neck Press and Blow (NNPB) technology in West African sub region.
Operating in both the local and export markets, Beta Glass made N14.5 billion as gross earnings at half year 2019, representing an increase of 10 percent over N13.14 billion the company made in similar period in 2018. It was the earnings from the export market that showed higher growth during the comparable period. As against N516 million earnings made from the export market at half year 2018, the first six months of 2019 saw its revenue from the export market grow by 102 percent to N1.042 billion, implying that the current expansion drive, which is set to be completed by 2020, may not be unconnected with the desire to tap the emerging opportunities in the export market, especially as African countries continue to look for ways to bolster intra-African trade. Sales within the country rose by 6.4 percent from N12.62 billion in the first half of 2018 to N13.43 billion in the first half of 2019.
The new furnace, according to the release from the company, will have a productive life of more than 12 years and will replace the existing furnace which will end its productive life by next year, the company said.
“The new furnace will enable us to leverage the latest technology and our technical expertise to make glass packaging products in Nigeria, whilst promoting sustainability and improving our environmental footprint. This investment will enable growth and create long term value for both our shareholders and society”, Abimbola Ogunbanjo, Chairman, Beta Glass Plc, said.
The demand for glass bottles has grown in Nigeria due to the rising population who need products from pharmaceutical, food conservation, cosmetics firms and for domestic purposes.
“We are delighted by the progress we have made so far on the expansion project. Our investment in this state-of-the-art facility reaffirms our deep faith in Nigeria and the high growth potential of West Africa. The new furnace will significantly enhance our ability to meet the growing demand for glass bottles and jars in Nigeria and across West Africa, as well as create a number of new jobs, both direct and indirect. I would like to thank our stakeholders for the invaluable support since inception of the project”, Darren Bennett-Voci, managing director, Beta Glass, said.
Meanwhile, the notice sent to stakeholders by the company did not state if the fund was through borrowings. This becomes important because as at the end of the second quarter of 2019, the company had N14.824 billion as total liabilities and N31.957 billion as equity, which brought the total equity plus liabilities to N46.782 billion. In other words, the gearing ratio at half year 2019 was 43 percent. That was different from 56 percent gearing ratio at half year 2018. At the exchange rate of N306/$, the $30 million investment will amount to N9.18 billion which could raise its total liabilities to N24 billion.
Total comprehensive income as at half year 2019 was N2.33 billion compared with N2.39 billion same period in 2018. Investors traded 460 units of Beta Glass shares last Friday to close at N53.80 per share. Year to date, its share price has declined by 21.2 percent.