Our discussion this morning is on the third quarter (Q3) 2014 performance of Nigerian roofers who were impacted by the difficult business and economic environment.
First Alumiuim Nigeria plc and Aluminium Extrusion plc had sales stunted by influx of cheap materials from Asia countries like China flooding the markets.
There were no remarkable improvement at the topline level as the Q3 sales of First Aluminum and Aluminum Extrusion grew by a single digit 7.01 percent to N8.09 billion from N7.53 billion the corresponding period of (Q3) 2013.
Roofers had most of their profits eaten by input costs as average cost of sales ratio was as high as 90.72 percent, which means for every N1 of sales generated, these firms spent N0.90 on production costs, leaving roofers with a very low average net margins of 1.47 percent and an average pretax margin of 1.85 percent. Cumulative profit after tax (PAT) in the review period was N111.84 million, which highlights the urgent need for the management to cut costs to boost profit.
Industry analysts also attributed double taxation, unnecessary delay at the ports caused by the customs, as other impediments debilitating the growth of these firms.
However, we see the Nigeria growing population and rising middle class that crave accommodation as major driver for growth for companies operating in the sector.
It should be noted that over 60 percent of the entire population of the country live on rented accommodation.
PATRICK ATUANYA AND BALA AUGIE
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