Chemical and Allied Products Plc (CAP), one of Nigeria’s leading paints and decorative companies, announced its unaudited results for the nine months ended September 30, 2020.
Amid pretax profit decline to N1.4billion and revenue growth to N6billion, the company said it will continue to evaluate various opportunities and plan to invest for growth.
Financial review
Revenue grew by 3.7percent year-on-year (Y-o-Y) to N6billion in the nine months (9M) period of 2020, on account of strong volume growth of 10.8percent YoY despite the COVID-19 related disruptions in April and May. The 9M 2020 revenue improvement was driven by a strong third quarter (Q3) performance, with revenue growth of 33.7percent quarter-on-quarter (Q-o-Q).
Gross profit of N2.7 billion was achieved in 9M 2020, reflecting a decline of 2.1percent YoY due to input cost escalation from supply chain disruptions, inflation and currency devaluation.
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Earnings before interest and taxes (EBIT) for 9M 2020 is N1.2 billion. EBIT margins whilst strong at 19.5percent represents a decline of 610
basis points YoY due to the impact of gross profit compression mentioned above, and
budgeted staff cost increases driven by deliberate initiatives to strengthen the work force.
Profit before tax of N1.4 billion was achieved in 9M 2020, reflecting a decline of 850 basis points
on Profit Before Tax margin due to the decline in operating profit; and a 40.6percent decline in net
finance income due to lower investment income yields compared to prior year.
Total profit for the period was N928 million in 9M 2020, a 24.4percent decline from N1.2 billion reported in 9M 2019. Earnings per share for the period was 133 kobo, down 24percent from 175 kobo in 9M 2019.
Operating Cash Flow for the period was N285 million in 9M 2020, compared with N424million in 9M 2019. The company continues to maintain a strong cash position of N4.97 billion with a
15percent growth in cash and cash equivalents between December 2019 and September 2020 which provides a buffer for operational requirements.
Commenting on the performance, Managing Director, David Wright, stated: “In the last quarter of 2019, CAP embarked on a new growth strategy focused on creating value for our shareholders and we are encouraged by the top line growth thus far. CAP’s performance in 2020 has been affected by COVID-19, particularly in April and May as a result of the stringent movement restrictions which constrained production and led to supply chain disruptions.”
“Despite the challenging operating environment, we achieved strong revenue and volume
growth of 34percent and 34.6percent respectively in the third quarter of the year. Going forward, we expect to continue to see the positive effects of our growth strategy on our sales and remain focused on managing operating costs to deliver on profit ambitions in the fourth quarter,” he said.
Chemical and Allied Products Plc is a leading paints and coatings company in Nigeria with globally recognised brands such as Dulux and Caplux. The company manufactures and sells premium and standard paints and coatings and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria.
