Chemical and Allied Products Plc (NSE – CAP) has released its unaudited financial statements for the period ended 31 December 2020. The company reported an increase in revenue for the full year 2020 compared to 2019, however profit for the year declined by 26.0%.
Financial Review: Q4 2020
Revenue increased 4.4% to N2.8billion in Q4 2020, supported by strong volume growth (30.4%) across key product lines.
Gross profit of N1.1billion was achieved in Q4 2020 from N1.2billion in Q4 2019, reflecting a 13.2% decline. The decline in gross profit was due to higher input costs on account of supply chain disruptions resulting in a scarcity premium on raw materials which were in short supply.
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EBIT was N475million compared to N640millionin Q4 2019 on account of higher cost of sales.
Operating expenses increased 0.3% YoY while operating expenses/ sales improved 90bps.
Profit Before Tax of N532million was achieved in Q4 2020, a 28.1% decline from N739million on account of the combined effects of the decline in operating profit mentioned above and a 42.6% reduction in net finance income given lower treasury yields compared to prior year.
Profit after tax in Q4 2020 declined by 28.1% to N362 million from NN503 in Q4 2019.
Financial Review: FY 2020
Revenue increased 3.9% from N8.4billion in FY 2019 to N8.7billion in FY 2020, driven by strong volume growth despite the disruptions in April, May and October.
Gross profit declined 5.5% toN3.8billion, with gross margin of 43.0%. Gross profit decline due to input cost pressures on account of currency devaluation and supply chain disruptions.
EBIT of N1.6billion, reflecting a decline of 22.4%, with EBIT margin reducing 638 basis points from 25.2% to 18.9%. Key drivers of the reduction in EBIT are the decline in gross profit and investments in talent to strengthen the work force and drive profitable growth.
The decline in EBIT, coupled with a 41.1% decline in net finance income on account of lower investment income yields resulted in a Profit Before Tax decline of 25.5% to N1.9billion in FY 2020. Profit Before Tax Margin declined 860 basis points to 21.7%.
Total profit for the year was N1.3billion, a 26.0% decline from N1.7billion reported in FY 2019.
Earnings per share for the period of182kobo, down 26.1% from 249kobo in FY2019.
Free Cash Flow of N1.0billion in FY2020, compared toN1.5 billion in FY2019. Free cash flow impacted by lower operating cash flows which was offset by a reduction in net capital expenditure (-58.4% decline to N113million in FY 2020). The company continues to maintain a strong cash position (N5.8billion) which will be deployed towards growth initiatives.
The equity price has been flat at N20.50 since January 20, 2021. YTD it is up by 2.5% while in 2 years and 5 years it down by 35.43% and 44.89% respectively.
About CAP Plc
Chemical and Allied Products Plc (CAP) is a leading paints and coatings company in Nigeria with globally recognised brands such as Dulux and Caplux. CAP manufactures and sells premium and standard paints and coatings and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria.
CAP pioneered the colour centre concept in Nigeria in 2005, which resulted in the evolution of the Nigerian paint industry. Today, CAP has 76 colour centres and colour shops across 31 states. CAP is a public company listed on The Nigerian Stock Exchange. It is a subsidiary of UAC of Nigeria PLC which holds 51.49% of the company’s shares.
The company announced the proposed merger between CAP and Portland Paints and Products Nigeria Plc in the fourth quarter of 2020.
Ifunanya Ikueze is an Engineer, Safety Professional, Writer, Investor, Entrepreneur and Educator.