QUARTER RESULTS (4): Flying start for Union Bank, Nigerian Breweries under pressure.

UNION BANK: FLYING START
Union Bank PLC had a flying start in the first  quarter of this year and only needs to maintain the momentum to close the year much the same way.
According to the first quarter unaudited figures released recently, the good news was not because Union Bank grew its gross earnings but because some non- core income streams grew so well while not allowing interest expense and personnel cost to grow wings.
Gross earnings had dropped Marginally to N27275m principally because Other operating income decreased by 93% to N160m from N2296m.
If not, there was 4.67% growth in interest income to N21488m, 32.1% increase in fee and commission to N2718m and 28.3% rise in net trading income at N2740m.
Interestingly, the growth in interest income was accompanied by 16.6% drop, not increase in interest expense to N6599m.
In addition in spite of 1.55% lift in loans and advances to customers, impairment provision went down by 53.1% to N1140m; and personnel cost eased by 1.38% to N7490m.
Thus the chips that didn't quite fit in for Union bank within the quarter include 3.29% rise in Other operating expenses to N6024.3m; and higher loss of N14741m from equity investment as against 14414m loss by the same time in 2015.
In the end, Union bank ended the quarter with a far better 17.6% profit margin compared to only 9.12% reported by March
UNION BANK PLC. (Nm)
                 First quarter
                       16.                 15
G. Earnings  27275.           27283
Int Income.   21488.           20530
Int Expense    6599.             7912
Impairment.   1140.             2432
Commission.  2718             2058
Trading inc.     2740.            2135
Cash recovery    169.             307
Other op. Inc.      160.          2296
Personnel cost 7490.          7595
Other op. Exp.   6024           5832
Profit B4 tax      4795.          2489
Profit margin %   17.6.           9.12
Loans              372408.     366721
Deposits.        602666.      570639
NIGERIAN BREWERIES PLC: COST PRESSURE
Nigerian Breweries PLC started this year almost being unable to withstand cost pressures from so many angles.
According to the interim figures for the period, there was so much cost pressure that from a double digit 10.9% increase in core revenue to N77554.9m and 10.8% lift in total income to N77756.9m, its profit before tax only increased by 0.08% to N15007.5m.
Naturally, the first pressure came from cost of sale that ended the quarter 11.9% up at N40273.3m
Then net finance came down hard like a hammer as finance cost rose by 49.6% to N3045.8m accompanied by 45.3% drop in finance income to N58.4m.
The one from marketing and distribution was milder as it increased by 10% to N13931m almost akin to 9.73% increase in administration expenses to N5500.3m.
In the end, though still strong, Nigerian Breweries ended the quarter with 19.3% profit margin compared to 21.4% at the same time in 2015.
Naturally, it also ended in a weaker liquidity position as working capital closed at N123358.4m deficit as against N82880.3m deficit previously.
Partly this was due to considerable increase in prepayment and deposits for imports.
NIGERIAN BREWERIES (Nm)
                     First quarter
                      2016.              2015
Total inc.    77756.9.         70157.5
Core rev.     77554.9.         69921.6
Cost of sale 40273.3.        36005.6
Other inc.         143.6.             129.1
Marketing etc 13931.0      12644.6
Administration 5500.3.       5012.6
Finance income.   58.4.       3106.8
Finance cost     3045.8.       2036.3
Profit before tax 15007.5.  14995.1
Working cap.  (123358.4) (82880.3)
Prepayment.         855.8.        354.4
Profit margin %.   19.3.            21.4

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