RED STAR EXPRESS: NOT THAT BRIGHT

The stars in Red Star Express PLC do not seem likely to shine that brightly in the current financial year to March 2016. Or so nine months figures to December 2015 seem to indicate.
According to the figures released this week, turnover is not only under pressure but more importantly, direct cost is growing out of tune.
Group Turnover from core business eased slightly by 0.03% to N4999.1m from N5000.5m mostly because the company's turnover ended a bit more disappointing when compared to previous levels
But Red Star the company ended up being more in control of direct costs as its own increased by only 0.29% to N1997.4m from N1991.6m while the group direct cost increased by 1.95% to N3670.5m from N3600.4m.
Thus while group gross profit dropped by 5.11% to N1328.5m. that of the company went down by 4.64% to N860.6m
The same was the case with management of overheads. Here. the company's administration and operating expenses dropped by 2.26% to N621.6m from N635.3m compared to very marginal 0.08% decrease in that of the group to N899.9m from N900.6m.
However, in spite of significant reduction of term loan to N9.97m from N30.2m resulting in 44.7% decline in finance costs, group profit before dropped by 18.7% to N359.1m from N441.6m by the same time in the previous year.
This was because income from other sources, including finance income decreased significantly.
This worked out at N7.16 gain on each N100 income ( profit margin) compared to N8.79 by December 2014.
There was slight improvement in group liquidity position as working capital increased to N1294.2m from N1198.8m.
THUS:
* Obviously the outlook may be a bit better if Red Star group was more in control of its costs.
* Also, if income from other sources can be revamped

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