GOOD TRANSIT FOR TRANSCORP PLC

So far, Transcorp, the Nigerian conglomerate with subsidiaries in various sectors of the economy, seems to be transiting very well from heavy duty loss to double digit gains.

According to the interim figures to June released last week, two things are responsible: Solid growth in revenue and caged overhead costs. To this, we could also add considerably reduced foreign exchange loss.

The main drags were direct cost still out of control and inevitable growth in finance charges.

Total income growth was dragged down to 34.6% to N34,919.2m after core revenue grew by 37.9% to N34,173.9m. The drag came from near dry up of other gains to N4.66m from N370m ; and 22.4% dip in finance income to N434.6m

Then, direct cost had grown by 44.9% to N19,300m thus limiting gross profit increase to 29.8% to N14,873.9m, that is below revenue growth.

It was from this level, 27.1% increase in other income to N306m; single digit 7.51% rise in administration cost to N5663.6m;  and 93.6% reduction in loss on foreign borrowings to N721.7m from N13,887m previously, helped Transcorp to land in N4532.4m profit before tax compared to the loss of N11,209.9m at the same time in 2016.

This was despite 19.3% increase in finance charges to N4702.5m due, most likely to 26.2% increase in long term debt to N92,050.1m.

Not bad at all because the longer term loan portfolio increase was accompanied by 46.9% reduction in short term debts to N13,586m. The net result was that previous working capital deficit of N1981.4m transmitted into N14,176.9m surplus by June this year.

So, Transcorp should have more leeway to build on the 13% profit margin it has achieved thus far compared to 43.2% loss margin by June 2016.

TRANSCORP PLC: Nm Half year
                             2017.             2016
Total income  34,919.2.       25,950.3
Core revenue  34, 173.9.      24,779.5
Cost of sale     19,300.0.      13,321.7
Gross profit      14,873.9.      11,457.8
Administration   5663.6.         5268.2
Other income        306.0.           240.8
Other gains.               4.66.         370.0
Operating profit   9520.9.        6058.4
Finance income.    434.6.          560.0
Finance cost.       4702.5.        3941.2
Forex gain.         (721.7).       (13,887.0)
Profit before tax. 4532.4.     (11,209.8)
Profit margin %.      13.0.        (43.2)
Long term debt  92,050.1.    72,943.6
Short term debt  13,586.8.   25,600.7
Working capital   14,186.9.  (1981.4)


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