Sale Of Equity Stake Lifts Chellarams To Profit, After Revenue Drop

Chellarams Plc became the first company with March year-end to present its audited financials for the year ended 2018 to the Nigerian Stock Exchange (NSE) on Wednesday, when it reported a 29.58% decline in sales revenue, just as administrative expenses soared by N2.63bn or 150%. The company’s operating loss was transformed into profit by a N2.665bn one-off gain on disposal of investments in equity, which resulted in profit before and after tax for the period.

Specifically, sales revenue for the year fell by N3.668bn, or 29.58% from N12.4bn in the corresponding period of 2017, to N8.732bn, a breakdown of which trading and distribution of fast moving consumer goods, contributed dropped to N1.326bn, from N3.84bn. Industrial chemicals reduced marginally to N2.449bn from N2.728bn; ingredients grew fastest from N692.789m to N1.399bn; revenue from machinery climbed to N2.287bn from N1.11bn; and plastic film, N1.27bn, down from N3.822bn.

By geography, the bulk of revenue for the period came from Lagos/head office, which contributed N7.119bn; followed by Onitsha with N760.613m; ahead of the N556.157m from Kano; ahead of N255.509m from Kano; Kaduna contributed N255.509

Cost of sales also dropped from N9.046bn to N6.917bn, resulting in gross profit of N1.815bn, down from N3.353bn, with Lagos/head office yielding N1.707bn gross profi

Cost of sale was also boosted by the N5.412bn recorded for Lagos; Onitsha with N700.961m; Kano, 523.386m; and Kaduna, N233.209, among others.

Other operating income soared by N875.94m or 775.94% from N96.838m in 2017 to N875.943m, with rental income accounting for the lion’s share of N544.182m representing 62.12% of total, from N57.924m, just as there was a N237.4339m one-off profit on disposal of property, plant and equipment, among others, or 27.1%. Selling and distribution expenses increased to N84.157m from N78.319m, lifted by the N54.997m sales expenses, which rose from N33.329m.

Administrative expenses soared from N1.754bn to N8.384bn, the biggest contributor to which was the N2.174bn impairment charge, which rose from N29.815m; followed by N724.169m salaries and wages, which dropped marginally from N793.929m; leaving operating loss of N1.777bn, with industrial chemical segment contributing N518.806m; ingredients pooled N147.138m; plastic film, N226.364m; and machinery, N356.452m. Industrial chemicals chalked N522.575m; just as FCMG, N564.603m. In the prior year, profit stood at N1.617bn.

The company cut its finance costs down to N599.549m from N950.406m, which was mainly the N570.62m interest on bank term loans and facilities, down from N878.026m; fair value loss on investment in associate, N18.918m, as against N106.422m.

The sale of equity investment dropped from N567.738m to N269.904m, representing a N297.834m or 52.46%, from N567.738m in 2017; just as tax expenses slipped to N69.193m, as against the previous N233.683m. Net profit therefore dropped to N200.711m from N334.055m; even as other comprehensive income for the year, net of tax stood at N1.437bn; and total comprehensive income for the year, N1.638bn, or 245.38 kobo; up from just N334.055m, or 40.16 kobo.

The directors did not however recommend a dividend, making it the third successive year that the directors did not propose any payout, since 2015 when shareholders got 5 kobo per share, half of previous year’s.

Also, in the five years since 2015, Chellaram’s net assets per share has grown steadily to 471 kobo, from 161 kobo.