Despite a positive start to the year, Paint maker Chemical and Allied Products reported a doubledigit drop in its six-month sales reflecting the impact of the coronavirus lockdowns that reduced economic activities in Nigeria during most of the second quarter.
Chemical and Allied Products ( CAP) sales fell roughly 11% year on year to N3.49 billion in the period, its lowest first-half revenue since 2017. Its financials point to a 35% slump year on year in sales in the second quarter alone.this is compared to a sales growth of 10% in the first three months of the year.
CAP manufactures and distributes paints, personal and household products, crop protection and public health products. The company further provides decorating and renovating services. According to its financial report, the pressure was felt across all revenue segments.
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Paint businesses rely on growth in construction and real estate sector, but both sectors took a hit from the coronavirus outbreak in the first quarter of the year – especially real estate.
In the second quarter, the consensus is that there would be an underwhelming performance reported by the National Bureau of Statistics (NBS) as the impact of the lockdowns and other events crystalize. CAP trade receivable or credit sales jumped 130% to N667 million in the six-month period.
The paint maker was able to maintain its gross margin by prudent costsaving initiatives in the face of declining sales.
Chemical and Allied Products made roughly N48 as gross profit from every N100 sales, the same amount it made in the corresponding 2019 period.
Support was also seen from sales of scrap items, rental income, and exchange gains, which helped other income reach N43.84 million compared to N35.9 million last year.
Operating profit fell to N766 million from N1 billion as higher administrative expenses worsened a lower topline, while lower finance income dragged net finance income from N237 million to N128 million.
Profit after tax stood at N607 million, 30% lower from last year bringing earns per share to 87 kobo from 124 kobo.
Total Asset of Chemical and Allied Products rose nearly a billion naira to N7.66 billion with most of the increment from current assets.
Cash and cash equivalents rose 7% to N4.60 billion while additions to property, plant & equipment (PPE) fell 79% to N23.5 million.
Net asset per share dropped to 447 kobo from N473 kobo.
