ONE FARCE IN TODAY'S LA FARGE AFRICA

There is one farce in today's LA Farge Africa inherited from recent years: It is becoming increasingly difficult to grow the company's profit and by extension, bottom line.
Or so the audited figures for 2015 released recently alongside 2014 show quite clearly.
The thing synergy shown between the main company and its subsidiaries have in recent years not been able to grow the bottom line.
The subsidiaries seem to be better at growing gross revenue and caging cost especially of the direct kind but still end up dragging profit margin from safer heights clocked by the company.
In 2015, total income of LA Farge Africa increased by 30.9% from N268235m to N276511.8m as other operating income grew by 78.3% to N7294.9m from N4090.9m on top of only 2.46% rise in core revenue to N267234.2m.
In contrast, the company's total income increased by only 11.7% to N120699.2m from N108076.3m although core revenue grew by 8.28% to N114558.2m.
More glaring contrast was the 13.5% increase in cost of goods sold reported by the company which was reduced considerably to only 3.89% increase from N177782.7m to N184703.3m for the group.
The same trend persisted as group sales and marketing cost rose by 14.5% to N4482.8m compared to 41% rise for the company;  and as group general administration costs rose by 13% to N28402.6m from N25145.8m as against 21.2% increase for the company.
Much the same way, group other operating expenses increased by 281.4% from N1585.4m to N6047.4m while for the company a much higher leap was recorded from N516.4n to N4344.9m.
It was in finance cost management the company held the ace by reducing this by 18.2% to N2294.9m from N2804.5m compared only 0.48% drop in that of the group from N11265.5m to N11211.1m.
It also reaped more as investment income as this more than doubled to N5634.5m from N1770.3m while group investment income dropped by 34.5% to N2182.7m from N3333.6m.
In the end, after book entry charges. group profit before tax dropped by 27.5% to N29274.9m from N40358.1m compared to only 4.47% decrease to N30906.8m from N32353m for the company.
Thus, in 2014, the company ended with 29.9% profit margin that was dragged down to only 15% for the group. Come 2015, the company closed with 25.6% but that of the group hit a new bottom at 10.6%.
SO:
* Group synergy will have to be synchronised more to check the yearly drop in gain on each N100 income.
*  La Farge Africa liquidity also remains worrisome as working capital deficit closed 2015 at N15510.7m from N3505.7m with the company being more in deficit at N17001.8m for 2015.

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