CAPITAL OIL: TIME FOR SHOE STRINGS

For Capital Oil PLC. It looks like time is ripe for tightening its shoe strings, if it hopes to end year 2016 with broad smiles.

According to figures for the quarter to March released this week, Capital Oil has to take more control over it controllable costs while the less controllable ones continue to behave.

Naturally, shoe strings come in necessary when income takes
unexpected dive.

According to the results, total income dropped by 43.4% to N350.89m within the period.

It could have even gone down faster if it was driven only by 43.5% decrease in core income to N350.1m. The minor cushion came from 25.6% increase in other income to N0.54m.

The situation was helped further by a higher 48.2% decrease in less controllable cost of sale to N299.3m and 3.98% fall to N19.3m in finance cost.

Thus the hard to bite bullet came from more controllable costs.

For one, the 22% decrease in administration costs to N20.2m, though commendable, was less than the percentage drop in income.

For another, the worst case scenario even occurred as both controllable staff and distribution costs increased in spite of the income dive.

Selling and distribution expenses closed at N13.3m, up 25.5% while staff costs increased by 34.3% to N18.8m.

Hence, Capital Oil ended the quarter with N20m loss which, on the surface was an improvement on N28.4m loss reported by the same time in 2015.

However, it is a bit deceptive. The true picture emerges when it turns out that on every N100 earned, the quarter's loss was N5.70 while previously, it was N4.58.

In other words, who knows, Capital Oil could even have ended with some profit if it had held down its staff and distribution expenses.

Another good wake up call was the fact that working capital came to N378.5m by March as against N1192.1m  at the same time in 2015.

CAPITAL OIL PLC: Nm First quarter
                              2016.         2015
Total income.      350.89.     619.98
Core income.       350.1.       619.3
Cost of sale.        299.3.        577.7
Distribution etc.    13.3.          10.6
Staff costs.            18.8.          14.0
Other income         0.54.         0.43
Finance cost.       19.3.         20.1
Finance income.   0.25.        0.25
Profit before tax  (20.0).      (28.4)
Working capital  378.5      1192.1

Comments

  1. HENATES6 September 2016 at 17:17

    After posting the above, Henates has since found out that the figures were for 2015 first quarter, not 2016.
    They had just been released and our apologies for the year mix up. Capital oil has not released any figures for 2016 and are even still behind on 2016.

    ReplyDelete

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