Nigeria’s leading construction firm Julius Berger Nigeria Plc is still going strong as it pays N1.50k dividend per ordinary share to shareholders, despite economic lull.
The construction industry faced headwinds in 2015, resulting from low oil prices and revenue, which meant that most firms were heavily indebted.
Retrenchment of over 130,000 staff took place within the year as exposure to public sector reached N360 billion.
The situation impacted Julius Berger’s earnings in 2015 as turnover was N133.8 billion, 32 percent fall from 2014 figure.
Despite this, the construction giant was able to repay a loan of N2.9 billion within the year, and did not take new loans.
The firm won several contracts in 2015, including the 450 mega watts Azura-Edo plant, Dangote Jetty in Apapa, Lagos, and Asokoro Conference Centre in Abuja, among others.
Speaking at its investor forum in Lagos this week, where the annual report and financial statement for the year ended 31 December 2015 was presented, George Marks, managing director of Julius Berger Nigeria Plc, said the consequence of the economic slowdown was a net fall of Nigeria’s GDP from 6.3 percent in 2014 to 4 percent in 2015, stating that the construction industry now expects a proactive economic stimulus governed by revivalist policies.
According to Marks, the Federation of Construction Industry now earnestly seeks a bail-out programme for the sector, adding that cash-strapped member-companies now work below 30 percent capacity as clients’ inability to meet contractual obligations in a timely manner impacted the industry and forced a reduction in overheads and suspension of works on numerous projects.
He further said Julius Berger currently retains a necessary percentage of its capable employees, which it continues to train across functions and specialties locally and internationally.
He said economic stimulus programmes in the form of budget, reconstruction programme for the north-east, implementation of the National Integrated Infrastructure Master Plan, the National Industrial Revolution Plan (NIRP), the National Enterprise Development Programme, as well as the international assistance to Nigeria, could stimulate the construction industry and revive the Nigerian economy.
“A responsible and sustained community development ideology continues to galvanise the company’s corporate social responsibility initiatives as well as reliable emergency response nationwide,” the MD said.
He further said the company will diversify its service portfolio, urging that reforms in Nigeria would come but could take a minimum of two years.
Wolfgang Kollermann, company’s finance director, said Julius Berger’s profitability was sustained because the management proactively and rationally developed stringently targeted and efficient measures to alleviate the effects of the economic downturn and mitigate potential adverse consequences, adding that the net result was a tough but pragmatic measures adopted to attain cross operational efficiency.
During the period under review, cost of sales fell by 31 percent, which is proportionate to reduction in turnover, reflecting efficient management of project direct cost. Earnings ratio rose 9.9 times (60.66/6.13) in 2014 to 31.6 (42/1.33) times in 2015.
Kollermann said the company has been able to achieve successes with the active collaboration of shareholders, employees and stakeholders.
“The company has also, against all odds, been able to maintain dividend pay-out to shareholders,” the financial director said.
ODINAKA ANUDU
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