Shrinking Income, Profit: Julius Berger Diversifies Into Oil, Partners Petralon Energy

In a bid to diversify its revenue base for improved profit to the delight of stakeholders, the board of construction giant- Julius Berger Plc, on Monday informed the Nigerian Stock Exchange (NSE) of its foray into the oil and gas sector.
A statement by Cecilia Ekanem Madueke (Mrs), its Company Secretary, noted that the bid is via a strategic partnership and joint investment agreement with Petralon Energy Limited.
As part of the alliance, both companies would acquire and develop oil fields in Nigeria, in line “with the strategic goal of Julius Berger to diversify into the oil and gas sector.”
No further details were provided.
The need for diversification by Julius Berger may have become necessary, even from its audited numbers in recent years indicating that revenue was shrinking, falling to N138.993bn in five years, only 3.88% better than that of the 2015; following which the company recorded a N1.498bn loss before tax, as against the N6.499bn profit before tax in 2015. Besides the increase in administrative expenses and finance cost, the company reported N14.234bn foreign exchange loss, an item that did not exist in the previous year.
After tax loss for the period stood at N3.816bn, 256.42% down from the N2.44bn net profit reported in the prior year.
The situation was however saved by the group’s N6.822bn “other comprehensive income,” compared with the N680.028m loss a year earlier, which translated to total comprehensive income of N3.005bn, which represented 70.75% improvement over previous full year’s N1.76bn.
As a result, the directors were unable to recommend dividend payment for the year, following which some shareholders kicked, insisting that the company ought to have offered them bonus shares.
The company’s five-year financials showed that since 2012 when it earned N201.565bn, Julius Berger’s revenue has declined steadily by N62.571bn or 31.04%. The company recorded N212.737bn in 2013, which dropped to a low of N133.808bn in 2015, before the slight increase last year.
Within the period also, the fall in profit after tax was even sharper at N5.179bn or 63.2% from N8.194bn to N3.015bn, after hitting a low of N1.76bn in 2015.
According information available on its website, Petralon is a Nigerian upstream energy company into acquisition, development, operation and finance of hydrocarbon assets in the oil and gas sector, while seeking prospects in other African countries like Ghana, Kenya, Namibia, Uganda and Angola.
The board is chaired by Mutiu Sunmonu, former Managing Director of Shell Petroleum Development Company of Nigeria and Country Chairman of Shell Companies in Nigeria, who is the current chairman of Julius Berger.
The board also has Aigboje Aig-Imoukhuede, immediate past Chief Executive of Access Bank; Edith Unuigbe, former General Counsel and Company Secretary at Nigeria LNG (NLNG); and Ahonsi Unuigbe, founder and chief executive, a founding executive of First Hydrocarbon Nigeria, where he served as Chief Financial Officer & Executive Director; among others.