CON OIL PLC: THE HIDDEN STRENGTH.

It looks like Con Oil PLC has developed muscles hidden in its nine months to September 16.2% drop in profit before tax that only few eyes may be able to see.
According to the figures released earlier this month, on the surface it is a case of a major drop in revenue veiling the fact that attendant costs decreased at faster rates.
There was 42.3% decrease in main line revenue from N104233.8m to N60156.7m and due more harvests from other sources, overall income decline then came to 41.2% at N62828.6m.
Now, with good control over expenses incurred to generate this lower income, not only cost of sale dropped faster but also, administration costs too.
While cost of sale declined by 45.2% to N51250m from N93427.9m, administration expenses went down by 65.7% to N1653.3m from N4817.3m previously.
In the end, the only real spanner in Con Oil works was delivered by hefty 85.9% increase in finance charges from N1523.2m to N2831.9m.
Hence, though Con Oil was not able to increase its profit before tax but it achieved something equally important in trying times, profit drop was well behind the decrease in turnover.
Con Oil's profit by September came to N1760.2m down only 16.2% on 2014 corresponding period's N2099.6m.
Thus. the company's gain on each N100 income increased from N2.01 to N2.8.
THUS:
* That shows hidden control over cost but it certainly would have more noticeable if 4.56% rise in borrowing had not led to 41.6% rise in receivables and 30.4% increase in inventories.
* Also, much as the sharp increase in income from other sources was sweat, the equally sharp drop in other gains was bitter.