Background
In 1965, Julius Berger was awarded a contract to engineer, build and construct a major infrastructure project in Nigeria – the Eko Bridge in Lagos. This was the foundation of Julius Berger’s commitment to Nigeria.
Following this initial project, the company began to diversify its portfolio and its growth started to run in parallel to the development of Nigeria. In 1970, Julius Berger’s legal structure was changed into a Limited Company (Ltd.), later to be transformed into a Public Limited Company (Plc), listed on the Nigerian Stock Exchange in 1991.
Throughout this time, Julius Berger’s role in the development of Nigeria was also evolving. Proven to be a company that consistently delivered reliable solutions, Julius Berger became a pivotal partner in the building of the country’s fledgling industrial and civil infrastructure, and also a key collaborator in the development of Nigeria’s new capital, Abuja.
Today, Julius Berger maintains its role as an integral partner in Nigeria’s construction industry, laying the foundations for the country’s economic progress and development.
The company has 1.2 billion shares outstanding with shareholders funds of N21.03 billion as at the end of December 2013.
Financial results for 2013
For the year ended December 2013, Julius Berger Plc, a company that offers contracting services in Nigeria grew gross revenues by 5.54 percent year on year to N212.73 billion from N201.56 billion same period of the prior year (FY12).
Profit before tax (PBT) in the review period spiked by 31.43 percent y/y to N16.22 billion as against N12.34 billion as at FY2013.
Due to increased tax payment which doubled in the prior year, profit after tax (PAT) reduced by 2 percent y/y to N7.85 billion in 12M13 from N8.0 billion in 12M12.
The company was able to reduce the pace of growth of costs as cost of sales rose slightly by 2.81 percent y/y to N161.13 billion compared to N156.72 billion in 12M12, hence cost of sales margin dropped to 75.77 percent in FY13 from 77.61 as at FY12.
The reduction in production cost aforementioned above has impacted positively on gross profits as it grew by 15.08 percent to N51.60 billion in FY13 from N44.83 billion as at FY12, thus gross profit margins jumped to 24.25 percent in 12M13 as against 22.24 percent in 12M12.
Operating expenses for the year ended December 2013 rose by 2.75 percent y/y to N32.73 billion compared to N31.86 billion as at FY2013, while operating expenses ratio remained flat at 15 percent.
Net margins, a measure of profitability and efficiency remained flat at 3 percent in FY13 while operating profit margin increased to 8.86 percent as against 6.4 percent as at FY12.
Finance costs were up 9.30 percent y/y to N2.96 billion in 12M13 from N2.71 billion in 12M12, while total borrowings grew by 213.28 percent y/y to N25.71 billion as at FY13.
In addition, the company is highly levered as more outside funds are used to finance its operation thus debt ratio were as high as 725.6 percent in the review period.
Return on Average Assets (ROAA) slumped to 3.45 percent in FY13 from 4.46 percent as at FY12, while Return on Average Equity (ROAE) shrank to 37.14 percent in 12M13 as against 53 percent in 12M13 .
It takes 83 days for the company to collect money owned to it from customers which explains the 24.09 percent increase in trade and other receivables to N53.71 billion in FY13 compared to N43.28 billion as at FY12.
Julius Berger’s total assets were up by 26.94 percent y/y to N227.26 billion as at the end of December 2013 from N179.03 billion corresponding period of 2012.
Share Performance and Outlook
The company’s shares are down 45.13 percent in the past year to close at N71.25-April 2rd 2013 on the floor of the Exchange.
Julius Berger had a market capitalization of N85.02 billion on the same day.
The company is also willing to reward its owners with a proposed dividend of NGN2.70k/share, (up from NGN2.50 in 2012FY) implying a dividend/Yield of 3.79 percent at the current market price.
Current Price earnings Ratio (P/E) and estimated P/E were 10.69x and 10.59 respectively.
The company also has Price to Book and Price to sales ratio of 5.65 xs and 0.42 on the same day.
BALA AUGIE
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