QUARTER RESULTS (7): FBN HOLDINGS PLC, BERGER PAINTS PLC.

FBN HOLDINGS PLC: BULLET BITING.

Due to its very high impairment provision for doubtful debts, FBN Holdings PLC has been struggling to regain control since 2015 but, says 2016 first quarter figures, bullet biting is beginning to help keep the massive ship afloat.
In 2015, FBN had to increase impairment provision by 360% and from the first quarter figures, the condition that demanded this had changed much. Hence, in the quarter, impairment provision still grew by 212.5% to N12754m.
This time around though while cost cutting measures introduced in 2015 only depressed operating expenses by 11.9% and limited personnel cost growth to 0.72%, operating cost and personnel expenses were down by 19.8% and 4.17% respectively.
This helped steer the ship in the first quarter alongside 12.4% decrease in interest income to N83457m that was accompanied by 45.2% decrease in attendant expense, leap in gain from sale of investment securities to N3465m, and 27.3% drop in reinsurance from only 10% drop on insurance premium.
However, apart from the ongoing high impairment provision, 97.8% decrease in dividend income also did not help matters just like 71.9% drop in fair value gain, 56.1% decline in Other operating income, 85.6% dive in gain for foreign exchange and 9.83% increase in fee and commission that was generated 16% higher cost.
In the end, cost cutting efforts plus better spread on financing, managed to hold profit drop for the quarter to only 5.27% to N22051m compared to 77.1% decrease in 2015 year.
Now, the issue is it possible that like 2015 21.2% first quarter margin which closed the year later at 4.25%, could repeat itself this year?
May not provided bullet biting continues to be effective but, of course, the leaks showing in so many income streams so far, will also have to be blocked.

FBN HOLDINGS PLC:  (Nm)
                    First quarter
                      2016.               2015
G. Earnings 107613.         126970
Interest inc.  83457.           95308
Interest exp.  19584.          35742
Impairment.  12754.            4081
Ins. Premium  1676.            1863
Reinsurance.      125.             172
Commission. 16489.       15013
Comm. Exp.      2144.       1849
Forex gain.        1398.        9706
Inv. Securities.  3465.          163
Fair value gain    722.       2565
Dividend income. 33.        1503
Other Income       373.        849
Ins. Claims.          369.        535
Personnel.          21435.    22367
Operating exp.   25525.     31819
Profit before tax 22051     26944
Profit margin %     20.5.       21.2

BERGER PAINTS PLC: NEW TIGER

If first quarter figures to March are anything to go by, then Berger Paints PLC has found a new tiger to tame this year if all is to end well.
According to the unaudited results, Berger Paints returned a rather disappointing 4.6% profit margin during the quarter compared to 15.5% previously.
Yet revenue increased by 7.68% to N760.1m without much pressure from direct cost which grew by lesser 5.43% to about N392.2m.
The main problem was that operating expenses ended March about 50% up thus making operating profit decline by some 71.7% to N30.9m from N109.3m.
From this profit before tax closed at N35.0m because of interest income reducing the final drop to 66%.
But the damage was already done by the phenomenal growth in operating expenses.
However, Berger Paints liquidity position continued to wax stronger although more on the slower side within the quarter.

BERGER PAINTS PLC:  (Nm)
                 First quarter
                          2016.           2015
Revenue.          760.1.          705.9
Cost of sale.    392.2.          372.0
Gross profit.     367.9.          333.9
Operating cost 337.0.           224.6
Operating gain.  30.9.           109.3
Profit before tax 35.0.            103.0
Profit margin %.   4.60.            15.5

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