AT LAST, A SIGH FOR CHELLARAMS

At last Chellarams PLC seems on course to earn a sigh of relief this financial year ending March. That is if trend in the nine months to December 2014 continues or is even improved upon.
According to the figures released last week, the credit goes to relatively good cost control especially direct costs as revenue continues to decline.
Chellarams core revenue declined  by 20% to N13472m pushing group core revenue down by 19.9% at N15962.9m from N19881.6m same time previously
This was accompanied by a far higher percentage decrease in direct cost thus implying  this was effectively held. Cost of sale within the period came to N11006.1m, down 29.6% for the company and to N12825.6m for the group representing 28.7% decrease from N17992.5m previously.
For the group this translated into 84% leap in gross profit and more than doubled one in the case of the company.
This was fortified further by 37.2% drop in group distribution costs to N196.7m from N313m ahead of equally impressive 30.7% decrease in the company's distribution cost to N148.7m.
For the company this was further fortified with 20.3% decline in administration expenses to N1326.6m from N1674.2m but less so for the group as less grip by subsidiaries led to only 16.6% drop in this cost head to N1731.8m from N2076m. That is decrease that was less than the drop recorded in core revenue.
However, the one major common blow all these fortifications readied for was from finance cost. It almost tripled in the case of the company and more than doubled for the group.
The group finance cost closed the period at N1187.5m, up 111.8% on the N560.8m  same time previously. In the case of the company, the rise was by 140% to N1006.6m from N419m.
Left alone in both instances the end result should have been marginal losses for both within the period but the figures state profit before tax of N181.6m and  N231.3m for the company and group respectively.
This could only be correct if the Other income subhead shown as losses in the figures obtained from the stock exchange website are actually gains. So Henates assumed they were gains, not losses.
In the end,  based on that Chellarams group closed the nine months with a deserved sigh  as profit margin ended at 1.43% compared to 5.33% loss by the same time last financial year.
It was less so for the company but a sigh all the same because at 1.33% its own profit margin also compared favourably with 5.56% loss up to December 2014.
SO:
* Someone may need to keep better eye on finance charges since overdraft actually declined and Bank import finance grew only by 0.62%.
* Next major task remains how to grow core revenue.

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