MAY & BAKER PLC BORDER LINE DANCE.


May & Baker Nigeria PLC may end financial year 2016 closer to the borderline between profit and loss than it did in 2015.

According to the third quarter figures released this week, by December 2015, the company ended up making only N1.86 on each  100 income after clocking N1.14 by the third quarter.

Now, says the figures, third quarter 2016 ended with N1.11 profit on each N100 income, and if 2015 trend holds, the year end figure should be lower than the 2015 one.

Yet May & Baker Nigeria did its best to dance out of the borderline. True, cost of sale went up by 20.1% to N4239.9m compared to lower 12.5% increase in core revenue to N5944.1m.

But May & Baker did drive distribution cost down by 9.16% to N769.2m; keep administration cost growth to  4.27% at N463.5m and earn more than double as other operating income (104.5% up at N18.1m).

Then investment income edged up by 6.41% to N16.6m and finance charges dropped by 35.8% to N377.8m. So what went wrong?

Nothing only that because of the Naira devaluation, May & Baker Nigeria lost N62m within the period compared to N42.7n gain in 2015 full year.

Thus, but for this foreign exchange loss, May & Baker Nigeria should have made profit in the neighborhood of N128m within the nine months, and not the N66.2m it ended with.

Yet, it is not a one off loss. It will continue to occur so long as the Naira remains weak and May & Baker Nigeria remains negatively exposed.

MAY & BAKER NIGERIA: Nm
                     Third quarter
                        2016.             2015
Total income 5978.8.         5308.3
Core revenue 5944.1.         5283.8
Cost of sale.  4239.9.         3531.0
Other op. Inc.     18.1.               8.85
Distribution.    769.2.           846.8
Administration 463.5.         444.5
Investment inc.  16.6.            15.6
Other gains.      (62.0).            -
Finance cost   377.9.          588.2
Profit b4 tax      66.2.            60.6
Profit margin % 1.11.            1.14

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