• Thursday, March 28, 2024
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Julius Berger posts biggest loss in 7 yrs as building works dry up

Julius Gerger posts revenue growth, records positive result despite difficult operating year

Julius Berger Nigeria Plc, the country’s largest construction company by market value posted its biggest loss in the first nine months of 2020 as revenue from building and civil works plunged. The construction giant saw a loss of N1.98 billion in the first nine months of the year compared to a profit of N5.3 billion recorded in the same period last year.

The shares of the company closed 1.30 percent lower at N19, Friday. Although its shares are up 14.5 percent year to date. Revenue dipped 12.5 percent to N168 billion in 9M’20 compared to N192 billion in the first nine months of 2019.

The company’s revenue from building works and civil works declined by 12.4 percent each to N71.3 billion and N88.1 billion respectively from a year earlier. Revenue from services also dropped by 12.8 percent to N8.8 billion in 9M’20 to N10.1 billion in 9M’19.

Sales cost fell 8 percent to N138 billion in the nine months period compared to N150 billion in the period a year earlier. Lower sales led to a 28 percent drop in gross profit to N29.7 billion from N41.5 percent in the reference periods.

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Julius Berger’s profit from the sales of construction, Personal Protective Equipment ( PPE) such as safety glasses and face shields surged 127 percent to N1.2 billion in 9M’20 from N528 million a year earlier. The foreign exchange liquidity challenges also had an impact on the company in the period as it made a foreign exchange loss of N2.63 billion from N849 million in the reference periods.

Investment income which is income from interest payments, dividends, capital gains fell 46.8 percent to N318 million from N598 million in 2019.

The construction company slashed borrowing cost by 70 percent to N 1.8 billion in the first nine months from N6.1 billion in the same period last year as interest on loans and overdraft dropped. Interest on overdraft dropped 66 percent to N1.4 billion in 9M’20 compared to N4.1 billion in the same period last year.

Julius Berger paid no interest on loans in the first nine months of 2020 compared to N1.7 billion in the first nine months of 2019. Bank commission and guarantee and financing cost also dropped 24 percent and 45 percent respectively compared to last year. Marketing expenses rose by 51 percent to N103 million in 9M’20 compared to N156 million in the same period of 2019. Administrative expenses dropped 23.9 percent to N22.2 billion compared to N29 billion in the reference periods.

The company made a loss before tax of N793 million from impairment loss on trade and tax receivables from a profit of N100 million last year. The construction company made a loss before tax of N996 million in 9M’20 compared to a profit of N7.5 billion in the same period of 2019.

Julius Berger’s earnings per share fell 82 percent to N0.85 per share from N4.86 per share in the first nine months of 2019. Income tax expense fell to N985 million in the nine months period from N2.1 billion in the previous year.

The company recorded an actuarial loss on retirement benefits of N89.5 million compared to gain of N161 million in the first nine months period of 2019. Exchange difference on translation of foreign operation widened to N3.3 billion in the first nine months of 2020 from N993 million in the same period last year. The construction company made a loss before tax of N996 million in 9M’20 compared to a profit of N7.5 billion in the same period of 2019

Q3 performance

For the three months period (June to September), Julius berger recorded a loss of 50 million compared to a profit of N5.3 billion in the same quarter last year. However, revenue rose 20 percent to N66.3 billion in Q3’20 from N60.4 billion in Q3’19. Cost of sales was up 13 percent to N48 billion in the third quarter of 2020 from N55 billion in the same period last year.

Gross profit for the period fell 5 percent to N11 billion in the period compared to N11.6 billion in the same period last year. Marketing expenses rose 133 percent to N49 billion, up from N21 billion in Q3’19.

The company made a foreign exchange loss on acquisitions of N3 billion compared to the same period in 2019 when it made no loss.

Profit before tax fell to N551 million in Q3’20 from N2.9 billion in the three month period of 2019.

The company was able to deleverage cost in Q3’20 as borrowing cost fell to N929 million in the period compared to N2.2 billion in the same period in 2019. Earnings per share fell to N0.83 per share in Q3’20 from N0.85 per share in Q3’19.