BOC Gases first half profits slow on rising operating costs

BOC Gases Nigeria plc, a company that manufactures industrial and medical gases, says low patronage from its value customers and rising operating costs caused decline in first quarter performance. This was stated in a statement posted on the website of the Nigerian Stock Exchange.

For the first three months of the year, BOC’ pre-tax profits fell by 28.86 percent to N100.76 million from N140.64 percent last year, while sales dropped by 3.09 percent to N537.32 million.

The board is not unmindful of the increased operational costs and has put in place measures to reduce them said the statement.

“Barring unforeseen negative circumstances, the directors expect that the company’s performance for the year would exceed previous performance,” it said

Operating costs increased by 22.76 percent to N224.06 million in Q1 2014, compared with N182.51 million as of Q1 2013, while operating expense ratio shrank to 12.76 percent to in 2014, from 17.62 percent in 2013.

Based on BusinessDay investigation, the company was able to reduce input cost as cost-of-sales margin declined to 40.61 percent in 2014, from 43.16 percent in 2013, while gross margin moved to 59.38 percent in 2014, as against 56.80 percent in 2013.

Net margin, a measure of profitability and efficiency, also took a hit as it fell to 12.76 percent in Q1 2014, compared with 17.62 percent as of Q1 2014.

BOC’s total assets were up by 7.27 percent to N2.96 billion in Q1 2014, as against N2.76 billion as of Q1 2013.

The average return on assets (ROaE) and average return on equity were 12.9 percent and 8.16 percent, respectively.

In other to boost performance, management is carrying out strategic changes aimed at placing the company on a globally competitive scale.

“The board is however pleased to report that deliberate focus is ongoing to improve other product lines such as liquid nitrogen, special gases and welding products with growth potentials and high margins to address the drop in revenue and operating profit,” according to the statement.

The company’s share price closed at N5.76 on the floor of the exchange, while market capitalisation was N2.39 billion.

 

BALA AUGIE