“Shock Treatment,” one of the several titles of legendary crime-fiction novelist- James Hardley Chase would best describe the feeling amongst investors and traders alike on the Nigerian Stock Exchange (NSE) when carbonated soft drinks maker, 7-Up Bottling Company Plc, presented its result for the nine-month ended December 31, 2016 to the market on Tuesday, leaving many wondering where the crystal balls went wrong, following which the buzz phrase became “Sell to cut your loss,” which may have accounted for the N1.30 or 1.15% loss it sustained at the close of trading.
Many may not have expected an utterly fantastic result. However, they did not also dream of such abysmal result that may have foreclosed any expectation for dividend from the director at year-end in March, such that despite the more than a quarter per cent rise in sales revenue, the Ijora, Lagos-based franchise holder of the 7-Up and Pepsi brands of cola drinks reported a huge loss before and after tax, triggered by the 52.15% rise in cost of sales in the period.
According to the result, revenue increased by N15.673bn or 26.02% to N75.899bn, helped by the over N8bn growth in third (October to December) quarter; while was rubbished by the even faster N21.966bn rise in cost of sales to N64.086bn, when compared to the N42.12bn of 2015. This resulted in gross profit of N11.812bn, down by N6.293bn or 34.75% from the N18.105bn recorded in the preceding nine-month period.
Selling & distribution expenses for the period stood at N9.699bn from N8.465bn, representing 14.57% rise; just as administrative expenses fell slightly to N3.937bn from N4.357bn, just as finance cost increased to N3.164bn from N2.556bn.
With all of these, loss before and after tax stood at N4.843bn as against the profit of N2.884bn. It was propelled by the N2.897bn recorded as loss in the three months between October and December.