These are definitely not the best of times for shareholders of construction giant, Julius Berger Nigeria Plc, judging from its financials for the half-year published on Thursday, showing that the management was unable to convert more of the significant revenue derived during the period to profit.
This means the management must put in more efforts for shareholders to enjoy as much returns on their investment as last year.
Revenue rose to N131.783bn, an increase of N58.705bn or 80.33% from N73.077bn; with the government remaining its biggest client, contributing the bulk of its revenue. Civil works remained the company’s biggest cash cow, accounting for N75.116bn, from N41.654bn; followed by N44.806bn from building works, as against N24.846bn; while services yielded N11.86bn from N6.576bn
Cost of sales rose by a slightly higher 89.12%, from N53.899bn in the first half of 2018 to N101.933bn; leaving gross profit at N29.849bn, up from N19.177bn, representing an increase of N10.672bn, or 55.64%.
Besides the increased growth rate of the cost of sales for the period, the result was mainly impacted even more negatively by the drop in ‘other gains,’ which was the drop in foreign exchange gains from N4.847bn in the first half of 2018 to just N98.833m.
Marketing expenses rose to N81.768m from N24.878m; administrative expenses increased by N5.923bn or 24.65% from N17.358bn to N22.446bn. There was also an impairment loss of N243.411m on trade and tax receivables.
Operating profit stood at N7.663bn, up by N1.031bn or 15.55% from N6.632bn; investment income rose from N645.694m to N808.409m; and finance costs inched slightly from N3.22bn to N3.91bn.bn, driven by the N2.684bn interest on overdraft facilities, which rose from N1.994bn. Interest on loan soared from N594.672m to N1.11bn.
Profit before tax for the period climbed from N3.929bn to N4.561; while a slight increase in tax expenses from N1.335bn to N1.726bn, left net profit at N2.834bn, representing N240.844m or 9.28% increase from N2.594bn.