Vitafoam shares hit 8-year-high as revenue surges due to sales during COVID-19

Shares of Vitafoam Nigeria, a leading manufacturer of different types of foam and bedding products hit its highest in eight years after the group’s profit for nine months surged by 72 percent owing to the improved product sales it experienced during the heat of the pandemic.

At the close of the market on Monday, the company’s share price had increased by 9.62 percent to N8.55 per share as investors reacted to the firm’s financial performance in the nine months ended September 2020.

The company as a provider of essential items like beddings emerged a winner amid the pandemic after making the sale of its products was used to set up isolation centres furthermore, subsidiaries of the firm engaged in the production of washable facemask, and other protective items during the heat of the pandemic.

According to the company’s financial statement, “the Vitablom Nigeria Limited subsidiary further innovated washable face mask to support the government in curving the Covid-19 pandemic, due to Covid-19 pandemic the system house developed Hand Sanitizer and Liquid Hand Wash, these products are already enjoying market acceptability. In support of the government’s effort at containing the scourge of Covid-19 pandemic, mattresses were donated during the year to equip isolation centres.” it stated.

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The company which has the largest foam manufacturing and distribution network in Africa, increased its revenue by five percent from N22.28 billion in 2019 to N23.44 billion in 2020, primarily driven by the sale its products especially the mattresses and pillows donated as part of the COVID-19 intervention in Nigeria.

In the year under review, Vitafoam sold products worth 22.61 billion which is a five percent increase from the 21.5 billion it got from products sale in 2019, while its other income grew by seven percent reaching N831 million in 2020 from N779 in the previous year. Furthermore, 97.3 percent of its revenue in 2020 came from Nigeria while 2.7 percent of its revenue came from Ghana and Sierra Leone

From the sale of mattresses and pillows donated during the COVID-19, Vitafoam made N1.85 billion as Lagos, Kano and plateau contributed 67.3 percent with N1.24 billion while other states contributed 32.7 percent with N605 million.

Its profit before tax grew by 62 percent to N5.64 billion in 2020 from N3.49 billion in the previous year. Despite a tax payment of N1.73 billion, its profit for the year surged by 72 percent to N4.1 billion in the period under review from N2.38 billion in the same period of 2019.

Owing to the increase in profit, the firm’s proposed dividend increased by 64 percent to N979 million from N595 million in 2019. Also the firm’s total equity grew by 51 percent to N9 billion from N5.9 billion in 2019.

The firm’s cost of sales reduced to N12.43 billion from N13.52 billion in 2019, while its assets increased by 57 percent to N21.63 billion from N13.82 billion in the same period of 2019.

Vitafoam also proposed a dividend payment of 70 kobo, per 50 kobo ordinary share which will be paid to its shareholders upon approval, the company also scheduled its annual general meeting to hold on the 4th of March by 10 am at the Radisson Blu Hotel Ikeja, Lagos.

Going forward, the company is positioned for growth as it is making large investments to its subsidiaries, like the acquisition of a new mobile plant for its various industries including agriculture, oil and gas, building and construction, pharmaceuticals etc.

“In line with our innovation drive, the company has acquired and installed a fibre sheet making machine which produces fibre sheets for furniture and quilting of mattress covers and duvets. Activities in this segment are championed by our soft furnishing subsidiary- Vitablom Nigeria Limited” the company stated in its financial report.

In addition, the company is moving to expand by launching its new line of business which is the oil filter production in the second quarter of 2021.

Vitafoam was incorporated on August 4, 1962, and listed on the Nigerian Stock Exchange in 1978 with six subsidiaries to its portfolio including Vitapart, Vono furniture, Vitavisco, etc.