Julius Berger posts profits amid tough operating environment  

 

Nigeria’s largest construction company Julius Berger Plc remained profitable in the first quarter of 2016 amid budget delays and the tough operating environment for businesses in Africa’s largest economy.

Julius Berger posted a profit of N251.36 million to start 2016 financial year, even as revenues dipped on slow construction activities.

Analysts say passage of the 2016 budget will help kick start construction activities and also boost Julius Berger‘s revenues as a backlog of receivables from contracts signed are expected to be cleared.
President Muhammadu Buhari presented a record N6.1 trillion  ($30.6 billion) spending plan on Dec. 22, saying expenditure needed to increase about 20 percent from 2015 to stimulate the economy of Africa’s biggest oil producer, which has been hammered by the slump in crude prices.

Growth fell to 2.8 percent last year, the slowest pace since 1999.

The record budget was delayed after the executive alleged in January that the document contained several mistakes and discrepancies.

Despite the aforementioned challenges, analysts opine that the budget stimulus would increase capital expenditure spending and hence trickle down to the top lines of construction firms and other companies that deal in building material.

Further analysis of Julius Berger’s financial statement showed net margin, a measure of profitability and efficiency was about 1 percent in 2016.

The construction company also recorded a gross profit of N7.17 billion in the period under review.

Julius Berger’s asset turnover was 0.28 xs in 2016.

In a sign of efficient management of resources and cost cutting Julius Berger’s cost of sales reduced by 35.76 percent to N21.52 billion in the period under review while administrative expenses reduced by 53.84 percent to N3.72 billion.

The company’s share price closed at N43.60 on the floor of the floor of the exchange while market capitalization was N56.76 billion.

 

PATRICK ATUANYA & BALA AUGIE