UACN OF NIGERIA: WHEN THE COOKIE CRUMBLES
As usual, when the cookie threatens to crumble, discerning eyes begin to see it first in the profit and loss account of companies like UACN of Nigeria PLC with tentacles in many sectors of the economy.
Now, it is visible in UACN's half year figures to June 2015.
According to the brief released to the stock market recently, the first quarter of the year was rough but within relative control. At least, about 14.7 per cent profit margin recorded by the first half of 2014 only eased to 13 per cent as profit for the first quarter dropped 21.2 per cent. That was ahead of the 10.7 per cent drop reported in turnover.
Come second quarter, however, this seeming elbow grip turned into a stranglehold. UACN recorded a slight drop in turnover in this quarter by 3.54 per cent to N19,646m from N2030m at the same time in 2014 but grappled with 68.4 per cent rise in distribution and administration costs to N4815.3m
In the end, in the second quarter alone, despite 56.4 per cent decrease in finance charges, the company eased into the loss league losing N150.2m as against a profit of N2438m in the second half of 2014 financial year,
Hence, as the two quarter figures were added together to provide the picture for the half year to June, what emerged was that due to the loss, the profit margin reduced to 5.74 per cent as against 12.6 per cent previously.
This was because as half year turnover dropped by 7.16 per cent to N37,375.4m, distribution and administration cost increased by 35 per cent while finance charges decreased by 30.8 per cent. Consequently, UACN profit before tax decreased to N2146m from N5661.7m by the first half of 2014.
THUS:
* Year end loss may not be likely for UACN, all things being equal, but it will be difficult to bank on even 2014 profitability level.
*However, if vintage UACN is still the old wine that tastes better with age, then one could foresee a head on battle with cost pressure in the second half that could lead to some reverse of the above trend.
Now, it is visible in UACN's half year figures to June 2015.
According to the brief released to the stock market recently, the first quarter of the year was rough but within relative control. At least, about 14.7 per cent profit margin recorded by the first half of 2014 only eased to 13 per cent as profit for the first quarter dropped 21.2 per cent. That was ahead of the 10.7 per cent drop reported in turnover.
Come second quarter, however, this seeming elbow grip turned into a stranglehold. UACN recorded a slight drop in turnover in this quarter by 3.54 per cent to N19,646m from N2030m at the same time in 2014 but grappled with 68.4 per cent rise in distribution and administration costs to N4815.3m
In the end, in the second quarter alone, despite 56.4 per cent decrease in finance charges, the company eased into the loss league losing N150.2m as against a profit of N2438m in the second half of 2014 financial year,
Hence, as the two quarter figures were added together to provide the picture for the half year to June, what emerged was that due to the loss, the profit margin reduced to 5.74 per cent as against 12.6 per cent previously.
This was because as half year turnover dropped by 7.16 per cent to N37,375.4m, distribution and administration cost increased by 35 per cent while finance charges decreased by 30.8 per cent. Consequently, UACN profit before tax decreased to N2146m from N5661.7m by the first half of 2014.
THUS:
* Year end loss may not be likely for UACN, all things being equal, but it will be difficult to bank on even 2014 profitability level.
*However, if vintage UACN is still the old wine that tastes better with age, then one could foresee a head on battle with cost pressure in the second half that could lead to some reverse of the above trend.
Comments
Post a Comment