The maker of Dulux and Caplux paint brand, Chemical and Allied Products (CAP) is not having a colourful year, so far, with nine-month profit barely growing after sales dropped in the three quarters that ended in September.
CAP reported a profit of N1.23 billion in nine months, 0.2 percent more than was seen in the corresponding period of 2018.
This contrast double-digit growth in profit last year, helped by a low base, as CAP ended a spell of profit decline in nine-month periods of 2016 and 2017, coinciding with Nigeria’s fall into and emergence from economic recession.
Revenue in the latest reported period slowed to 7 percent, down from 10 percent seen in nine months to September as the manufacturer noted N5.78 billion sales.
Gross margin, which is how much a company makes from every N100 sales, remained at 48 percent from last year, implying that CAP’s direct cost per N100 stood at N52 in both years.
A company’s gross profit, also called top-line, is realised after direct cost of production is accounted for.
Selling and distribution expenses rose by almost 68 percent to N366 million and administrative expense grew by nearly 19 percent to N960 million, while other income of CAP advanced by 20 percent approximately to N54 million.
Operating profit, a profit from business operations before deduction of interest and taxes, declined 6.75 percent to N1.48 billion.
Finance income rose by about 50 percent to N327 million and the cost of borrowing fell 86.7 percent to N434,000 in the nine months ended September 30.
Consequently, net finance income surged 51 percent more than N215.6 million seen last year.
CAP’s profit before tax grew marginally to N1.8 billion while an uptick in tax expenses to N577.97 million resulted in a profit of N1.23 billion, earnings per share of N1.75 kobo.
The performance meant that CAP made N21 from each of its N100 sales, which is a net margin of 2 percent points or N2 less than in 2018.
Shares of CAP remained flat at N25.55 per share on the Nigerian Stock Exchange (NSE). The company’s shares have declined 26.69 percent since the start of the year amid widespread pessimism in the equity market.
Chemical and Allied Products Plc manufactures and distributes paints, personal and household products, crop protection and public health products. The company also provides decorating and renovating services.
SEGUN ADAMS
