Diversified business base spur Transnational Corporation to growth

The diversified business segment of Transnational Corp. of Nigeria Plc (Transcorp), the company which has interests in industries ranging from agriculture, has spurred the conglomerate to growth as operating income took a upward trajectory  amid a tough operating economy.

For the year ended December 2015, the company’s operating income before interest depreciation and taxes increased by 10.35 percent to N15.03 billion from N13.62 billion as at December 2014.

Analysts say a diversified investment base makes the company’s earnings robust and its shares attractive to investors.

The challenges facing Transcorp in its operating environment and exchange rate movement and foreign exchange restrictions affected top lines as sales reduced by 1.40 percent to N40.75 billion in December 2015 from N41.33 billion as at December 2014. Cost of sales were up by 19.85 percent to N16.72 billion in December 2015 as against N13.70 billion as at N13.70 billion as at December 2014. Also profit after tax reduced by 30.30 percent to N2.03 billion in December 2015 from N3.30 billion as at December 2014.

Conglomerate in African’s largest economy are struggling with a weak currency and a sharp fall in oil price.

The fall in oil prices put pressure on the nation’s currency. After devaluation in November, followed by its plunge to a record low in February, the central bank stabilized the naira by imposing trading restrictions and banning importers from using the foreign-exchange market for about 40 items.

The foreign exchange restrictions are hurting companies as they are hindered access to dollars for the importation of raw materials and machineries to meet production.

Economic growth has slowed to 2.8 percent, the lowest in a decade. Inflation has arisen to 12.80 percent for the month of March as against 11.80 percent recorded in February.

UAC of Nigeria Plc, conglomerate giant said the weak economy has impacted negatively on its operations and some of its subsidiaries.The company has suspended its right issues due to weak equity market.

John Holt said the  devaluations hurt its operation and responsible for the loss recorded. 

Nestle SA said its local unit has had to widen the number of banks it uses so that it can access enough foreign exchange. Last year, it was waiting as long as six weeks to be allocated dollars, according to Renaissance Capital Ltd. analysts.

PZ Cussons said it is paid 70 percent more than the official rate of dollars.

Transcorp’s cost control measures put in place by management paid off as operating expenses were down by 20.20 percent to N10.11 billion in December 2015, from N12.67 billion as at December 2014.However finance costs grew by 65.34 percent to N12.88 billion in December 2015 from N7.79 billion as at December 2014. The significant increase in borrowing costs was due to foreign exchange losses and full year debt service on acquisition of finance loan for loan for Transcorp Ughelli Power Limited.

Transcorp Plc recently announced that its agric business subsidiary Terago Commodities Limited has acquired and installed extraction cup techonology, which instantly enables the coomoanty to deliver superior quality juice concentrate that meet international quality standards. It will also revolutionalize their product process and ensures that the concentrate produced will pass even the most stringent international standards.

The investment elevates the compamy to the top of the local concentrate producers and ensures that Teragro is able to cpmpete any international concentrate producer form Spain, Brasil, and the United states.

Teragro Commodities Limited is dedicated to alleviating poverty, creating employment and economic growth through investment in Agriculture. The company recently signed and MOU with the Benue State government to lease land to establish citrus fruit and to diversify crops. In addition, it continues to invest in capacity building for farmers as part of its Africa capitalist commitment to doing well for investors, while doing well for the community too. 

Transcorp Unghelli Power Limited, which is the core investor in Ughelli Power plant, recently reportrd a significant progress relaising plans to rise up the generating capacity pf plant from the current instsalled capacity of 972 megawatts (MW) to 2200 MW in the next three years.

Transnational Corporation of Nigeria Plc (Transcorp) is a leading diversified conglomerate. The company focus on acquiring and managing strategic businesses that create long term shareholder returns and socio-economic impact. Its business interests are in four strategic sectors: Power, Energy, Hospitality and Agriculture.

Incorporated on November 16, 2004 and quoted on the Nigerian Stock Exchange, Transcorp has a shareholder base of about 300,000 investors, the largest of which is Heirs Holdings Limited, a pan-African proprietary investment company.

The Nigerian conglomerate notable businesses include the award-winning Transcorp Hilton Hotel, Abuja; Transcorp Hotels, Calabar; Teragro Commodities Limited, operator of Teragro Benfruit Plant – Nigeria’s first-of-its-kind juice concentrate plant; Transcorp Power Limited which acquired Ughelli Power Plc, owner of the 972MW Ughelli Power Plant and Transcorp Energy Limited, operator of OPL 281.

The company recently released its full year results for the period ended December 2015 showing improvement in Key.

BALA AUGIE