NASCO ALLIED INDUSTRIES 2015 BURDEN.

In the financial year 2015, NASCO Allied Industries PLC bore the burden of new market hoping, perhaps, that in the near future better inroads can pave the way for more profitable streams.
According to the audited figures released recently, 2015 did not quite disappoint NASCO in its old business of salt production and freight but the slow down came from losses incurred in producing seasoning, tomato and vegetable oil.
In these three products. NASCO incurred loss right from the gross income stage as their cost of sale outstripped income recorded.
However. Profit realised from the strong streams was good enough to ensure 5.64% increase in profit before tax ( PBT) for the year to N3017.6m from N2856.4m
The fact that this single digit growth came from a far more solid 43.6% increase in total income to N16348.45m and 43.8% rise in core revenue to N16178.2m clearly showed the big hole the loss leaders bore in NASCO's bottom line.
The lower growth in total income was due principally to 69.4% drop in investment income to N9.26m even as income from other sources increased by 57.1% to N161m.
The main headaches for NASCO within the year turned out to be 90.8% jump in raw materials input cost to N7588.6m from N3976.6m. This made cost of sale to close 58.3% up at N11819.1m.
Other pressures included the 76.6% increase in distribution costs to N218.6m, 35.6% increase in administration expenses to N1273.1m and N20.1m in finance charges  compared to zero charge in 2014.
Naturally, NASCO profit margin had no option but to take a dive from 25.1% in 2014 to 18.5%.
SO;
* Oh sure bring double digit, the years profit margin was still safe enough but another dive of the 2015 kind could herald trouble.
* It looks like the N20.1m finance costs had more to do with accounting policy because there was no change in NASCO's overdraft and long term loan exposure.
 
NASCO ALLIED INDUSTRIES ( Nm)
                                                       2015                             2014
Total income                               16348.45                       11383.6
Core revenue                               16178.2                         11250.5
Cost of sale                                  11819.1                          7464.8
Gross Profit                                   4359.1                           3788.8
Other income                                   161.0                             102.9
Distribution                                      218.6                             123.7
Administration                               1273.1                             938.7
Investment income                              9.25                              30.2
Finance costs                                    20.1                                  -
Profit before tax                             3017.6                          2826.4
Profit margin %                                  18.5                              25.1
 

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