Greif Nigeria Plc has suspended its operations in Nigeria, following its inability to operate profitably in the country. The company announced this in the course of the week when it released the third quarter full year audited results for the period ended October 31, 2018 to the Nigerian Stock Exchange (NSE).
“The trends that have started mid 2018 still continue in the first (fiscal) quarter of 2019. As a result of increased competition and a stagnant market for steel drums, we do not see an improvement happening in the near future. Greif Nigeria has been operating well below operating costs, even below direct material costs, and sees no signs of improved market conditions. Therefore, we have decided to stop operations with immediate effect. The coming months we will investigate on if and/or how we can continue with Greif Nigeria”, the firm stated.
Revenue for the year fell by 62 percent to N653.6 million down from N1.41 billion in corresponding period in 2017. Cost of sales declined by 43 percent to N649.3 million as against N1.15 billion same period last year. But the reduction in the cost of sales is of little significance when other metrics are compared with it. Particularly when compared with the revenue, in an attempt to know how much it cost the firm to generate a unit revenue, the ratio shows that operations were more profitable in 2017 compared with 2018. In 2017, Greif Nigeria expended N82 to generate N100 revenue, as the cost o sales to revenue in 2017 stood at 82 percent whereas in 2018, for the firm to generate a unit revenue , it had to borrow extra N21. This was because the cost of sales to revenue was 121 percent.
Loss after taxation was N245.2 million compared with N77.6 million. Loss after tax was N262.6 million compared with profit after tax of N49.4 million in the previous year.
“Specifically for the companies in the steel drum business, the second half of 2018 witnessed a worldwide global steel demand surge in the market place caused by supply shortages as a result of scarcity of coking coal and China’s improved economy.
“This has led to shortage in steel availability in the international market place and increasing overall world prices of our basic raw material. Coupled with the challenges in the domestic economy already highlighted above, 2018 was a very difficult year to navigate”, Greif Nigeria said.
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