Vitafoam’s profit wilts on high operating expense

The operating expenses of Vitafoam Nigeria Plc, one of Nigeria’s major manufacturers of foam and bedding products, gulped 164.17 percent of the firm’s total profit in its second quarter of 2023, according to BusinessDay’s findings.

Operating in a challenging business environment, Vitafoam is grappling with escalating raw material costs and heightened competition, leading to a notable surge in operating expenses in the 6-months fiscal period of 2023.
During the 6-month fiscal period of 2023, operating expenses witnessed a significant 42.13 percent growth, amounting to N5.06 billion, compared to N3.56 billion in the corresponding period last year.

Within the same period, the firm’s operating profit experienced a decline of 12.69 percent, amounting to N4.4 billion, compared to N5.04 billion in the same period under review in 2022.

While the Profit after tax experienced a decline of 14.68 percent to N3.08 billion compared to N3.61 billion in the same period last year. There was a decrease in income tax from N1.53 billion in the 6-month period of 2022 to N1.48 billion in 2023.

Administrative expenses constituted a significant portion of operating expenses, reaching N3.96 billion, primarily driven by employee costs and exchange loss securities.

On a positive note, revenue witnessed a 4.58 percent increase to N26.5 billion during the 6-month period of 2023, compared to N25.34 billion in 2022.

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The majority of the revenue, amounting to N25.98 billion, was generated from the Nigerian market, while N544 million was generated outside Nigeria.

During the 6-month period of 2023, finance income exhibited growth, reaching N627 million, up from N434.7 million in the corresponding period of the previous year.

In contrast, Finance costs experienced a significant increase of 39.3 percent to N464.94 million in the reviewed period, compared to N333.69 million in the same period of 2022.

Total Equity and liabilities declined to N38.59 billion during the 6-month fiscal year, down from N39.44 billion recorded in the same period of 2022.

Net cash from operating activities demonstrated a modest increase to N3.370 billion in the 6-month fiscal year, compared to N3.26 billion in the 6-month period of 2022, primarily driven by an upsurge in inventory.

In the reviewed period, Net cash from investing activities showed a gain of N2.17 million, a significant improvement from the loss of N56.15 million recorded in the 6-month period of 2022, primarily due to interest received.

On the other hand, Net cash from financing activities incurred a loss of N2.97 billion during the 6-month period of 2023, compared to N23.5 million in the same period of 2022.

The closing balance of Cash and cash equivalents at the end of the period amounted to N15.68 billion, representing an increase from N13.877 billion in the corresponding period of 2022.