Rising inflation, currency depreciation, and dwindling consumer purchasing power have all contributed to Meyer Plc’s loss hole, preventing the paint maker from getting the money it needs to grow, BusinessDay’s findings showed.
With input costs claiming 73.7 percent of total revenue in the first six months of 2022, the paint maker’s loss amounted to N20.3 million, representing a further dip of 118 percent from the N9.3 million loss reported in the first half (H1) of 2021.
The firm’s revenue, being the highest reported in 6 years according to data collated by BusinessDay grew by 41.51 percent to N686.96 million in the first half of 2022 from N485.46 million in the first half of 2021.
Its cost of sales grew faster than its revenue by 52 percent to N506.3 million in the first half of 2022 from N332.5 million in the first half of 2021.
Earlier in the year, at the 50th Annual General Meeting of the company, Rotimi Alashe, managing director, explained that the challenges faced by the company, which led to an increase in the cost of sales, resulted from the cost of input and purchasing power.
“We struggle with the issue of foreign exchange and the cost of getting the materials. Locally, the purchasing power of customers is another challenge. With the higher input cost, it is expected that our prices should increase but we can’t because most of the customers cannot buy the products,” Alashe added.
Kayode Falowo, the company’s chairman, also said “raw materials have been a challenge in the industry, cost of sales have gone up, and we hope that when things get better in Nigeria and we have stability in the foreign exchange rate, that would positively affect how we are able to carry out our business and we will continue to ensure the quality of our products.”
Administrative expenses reported by the paint manufacturer amounted to N242.3 million in the first half of 2021, representing a 16 percent increase from N208.9 million in the first half of 2021.
Largely driven by the 114 percent surge in interest on finance leases, finance costs grew by 125 percent in the first half of 2022 to N2.7 million from N1.2 million in the corresponding period of 2021.
However, the company generated income from the interest it received on bank deposits, which amounted to N34.9 million in the first half of 2022 from N45.2 million in the same period last year.
Furthermore, Meyer’s total assets reported in the first half of 2022, were down by 38.8 percent from N2.86 billion in H1 2021 to N1.8 billion in H1 2022.
Its total shareholder’s equity also dipped by 41 percent in the first half of 2022 to N1.03 billion from N1.8 billion in the first half of 2021.
Cash and cash equivalents, which represent the total cash and liquid assets of a company declined by 42.6 percent in the first half of 2022, totaling N1.26 billion, compared to N2.2 billion reported in the first half of 2021.
Meyer’s net cash generated from operating activities amounted to N-182.7 million in the first half of 2022, suggesting that the company is not generating adequate cash from its operations.
Its cash flow from investing activities grew by 30 percent to N58.6 million in the first half of 2022, largely driven by proceeds from the sale of property, plant, and equipment (N26 million), and finance income (N34.59 million).
Repayment of short-term borrowings and finance charges during the period under review resulted in a negative net cash flow from financing activities of N7.5 million.
Meyer Plc is the Manufacturer and Marketer of high-quality Paints, including architectural paints, wood paints, auto refinishes, industrial and marine, road lining paints, Roof coatings, tube coatings, HP coatings, and adhesives.