BusinessDay

Despite high receivables, Julius Berger records highest profits in 10 years

Julius Berger Nigeria Plc in its recently released half-year financial statement on the Nigerian Exchange Group (NGX) reported a 26.05 percent spike in profit to N6 billion from N4.76 billion reported in the first half of 2021, despite having high receivables.

Data gleaned from Julius Berger financial report showed the profit and revenue reported by the construction firm in the first half of 2022 represent the highest half-year profit and revenue recorded by the company in 10 years, despite increasing receivables from government.

The company’s trade receivables which indicate the amount owed to a business by its customers following the sale of goods or services on credit grew steadily by 47.02 percent to N273.01 billion in the first half of 2022 from N185.7 billion in the first half of 2021.

According to Investopedia, receivables, also referred to as accounts receivable, are debts owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Oluwasesan Adeyeye, an analyst at CSL Stockbrokers Limited noted that construction firms like Julius Berger get paid in installments and are prone to default risks.

The firm’s revenue grew by 49.15 percent in the first half of 2022 to report N218.22 billion from N146.31 billion in the corresponding period of 2021.

Furthermore, a breakdown of the firm’s revenue shows that year on year (YoY), the government sector generated the bulk of revenue for the firm.

Revenue from the government grew by 65.4 percent to N177.66 billion in the first half of 2022 from N112.68 billion in the first half of 2021, accounting for 81.41 percent of the firm’s total revenue in the period.

Similarly, quarter on quarter (q/q) the company’s revenue from the government grew by 17.9 percent to N96.13 billion in the second quarter of 2022 from N81.53 billion in the first quarter of 2021.

The construction company’s major product or service line which generated the most revenue was civil works which amounted to N135.28 billion in the first half of 2022.

Building works and services amounted to N59.08 billion and N23.86 billion respectively in the first half of 2022.

Its cost of sales grew by 54.53 percent to N183.78 billion in the first half of 2022 from N118.93 billion in the first half of 2021.

Julius Berger reported administrative expenses of N24.49 billion in the first half of 2021, a 37.66 percent increase from N17.79 billion reported in the corresponding period of 2021.

Its finance cost during the period, however, declined marginally by 8.33 percent to N1.43 billion from N1.56 billion reported in the first half of the previous year.

Its shareholder’s equity grew by 4.96 percent to N51.43 billion in the first half of 2022 from N49 billion in the first half of 2021.

Total assets recorded by the company also improved by 49.75 percent to N536.62 billion in the first six months of 2022 from N358.34 billion in the first six months of 2021.

Contract assets, property, plant, and equipment (PPE) and trade receivables were responsible for the boost recorded in total assets during the period. Contract assets spiked by a whopping 427 percent to N42.28 billion year on year, PPE grew by 69.21 percent year on year, and trade receivables grew by 47.02 percent year on year.

Julius Berger’s total borrowings in the first half of 2022 amounted to N3.79 billion, a 41.69 percent decline from N6.50 billion reported in the first half of 2021.

Analysis by BusinessDay to evaluate the company’s financial leverage shows a debt-to-equity ratio of 7.37 percent.

Data from the half-year financial statement shows that Julius Berger reported negative cash flow from operating activities of N33.66 billion, negative cash flow from investing activities of N13.94 billion, negative cash flow from financing activities of N6.25 billion, and negative cash and cash equivalents of N14.55 billion in the first six months of 2022.

A breakdown of the cash flow statement shows that its cash outflow from operating activities during the period constituted of cash paid to suppliers and workers totaling N264.82 billion, taxes paid to total N61.55 million, and loss from foreign exchange acquisition totaling N1.91 billion, while its only inflow was from cash receipts from customers which amounted to N231.15 billion.

The construction business also invested long-term by purchasing new property, plants, and equipment (PPE) amounting to N15.20 billion in the first half of 2022. Its cash inflow generated from investing activities include the interest it received and proceeds from the disposal of PPE during the period which amounted to N952 million and N317 billion.

In financing activities, the construction company made payments of lease liabilities, interest, and dividends, amounting to N763.5 million, N1.49 billion, and N4 billion respectively in the first half of 2022.

BusinessDay analysis shows the company’s profit margin and returns on equity for the period are 2.75 percent and 4.2 percent respectively.

The company reported earnings per share (EPS) of N1.44 per share in the first half of 2022.

On the 15th of August, the construction company announced to the market that the pioneer cashew processing plant located in Epe, Lagos State, Julius Berger’s first agro-processing activity, cashew processing, will form the cornerstone of Julius Berger’s diversification activities, and in particular in the Agro-sector, would be launched on September 10, 2022.

The announcement was made via a press release available on the Nigerian Exchange Group (NGX), signed by the company secretary.

Julius Berger Nigeria Plc is a leading Nigerian company offering holistic services covering the planning, design, engineering, construction, operation, and maintenance of buildings, infrastructure, and industrial projects in Nigeria.

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