PORTLAND PAINTS & PRODUCTS PLC: THE ROUTE TO LOSS.

As Portland Paints & Products PLC ( PPP) continues to hope to plot its way back to form through new capital injection, the route to loss became open and clear by nine months to September.
According to figures for the period released recently, at issue is not just turnover decrease but also   stubborn cost components that refused to drop in tow with sales decline.
Within the period PPP recorded 18.8% decline in turnover to N1664.5m from N2049.8m but none of its attendant costs went down that fast.
The closest drop of 16.1% was reported in cost of sales from N1104.6m to N926.8m.
The least decrease was in administration expenses which dropped by only 1.16% to N376.3m from N380.7m. One concedes though that main part of administration costs do not fluctuate that easily with turnover.
Distribution cost closed September at N350.9m, down 7.85% on N380.8m previously.
As if to point the route out more clearly, finance costs increased by 28.5% to N90.1m from N70.1m in spite of a major 73.7% decrease in overdraft to N121.8m from N462.4m and 38.2% drop in non current liabilities to N189.8m from N307.1m.
With trade payables up 64.6% to N704.4m, inventories down by 17% to N627.7m and receivables growing by only 0.83% to N509m it looked more like the increase in finance cost resulted from higher charges as against more loans.
It is easy to see though that prepayment held up lots of cash within the period rising 102.4% to N111.1m from N54.9m.
In the end, all combined led to N78.1m loss by September compared to N198.2m 12 months earlier.
SO:
* Any major change in fortune by year end may come from how well Portland Paints tackles its costs.
* More money from rights issue could of course, help reduce the finance cost and even allow for foray into new streams to bounce out of the loss league.

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