CUTIX PLC: GETTING SO CUTE

This financial year Cutix PLC is likely to be one of the rare quoted equities in Nigeria that can be considered cute in spite of the trying times. At least, so the figures for the nine months to January this year clearly indicate.
It remains cute because though with gross income that is less than the profit of some fellow quoted companies, its bottom line continues to grow in spite of the times due to strength gained in virtually all aspects of the business.
By the nine months revenue was up in double digit ahead of cost of sale and good control over overhead  also helped profit reported to grow at a rate more than double the revenue increase.
Within the nine months overall income increased by 21.8% to N2112m from N1734m down slightly from the 22% rise in core revenue from N1721.1m to N2099.4m. This was because there was 2.33% drop in income from other sources to N12.6m.
Not to worry. Between this and the finish line was still the lower 21.1% increase in direct cost from N1248.8m to N1512.7m; 4.29% drop in distribution expenses to N55.8m from N58.3m and only 5.5% increase in administration cost to N228.3m from N216.4m.
In the end, Cutix Plc's operating profit before charging interest paid was N315.2m, up 49.7% on N210.5m by January 2015.
In view of the fact that interest paid rose by 22.4% to N108.7m from N88.8m, the final increase in profit before tax came to 69.7% from N121.7m to N206.5m.
Thus Cutix PLC ended January 2016 with N9.78 gain on each N100 income compared to N7.92 previously.
Just like in the previous year, the third quarter chipped in more to the bottom line and all things being equal fourth quarter should give an additional helping hand like it happened previously leading to higher gains by year close.
The net effect of all these was more readily visible in Cutix PLC liquidity position. By January 2016 working capital was N325.8m positive compared to N152.9m deficit by April 2015 and N117.1m surplus by January 2015.
Cash on hand was steady at N36.3m all in spite of 16.1% increase in inventories; 30.6% and 27.5% decrease in long term and short term borrowings respectively and despite 19.3% drop in payables.
The only variables outside good bottom line trend that made these happen were the 15.4% and 31% decrease in receivables and prepayments respectively.
SO:
* So long as the trend continues, Cutix PLC is on course to get even more cute by year end April 2016.
* It will help matters better though if growth in direct cost can be less close to core revenue growth.

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