Chemical and Allied Products Plc (NSE – CAP) recorded a 24.4% decline in profit after tax for the 9-month period ended 30 September 2020, despite a 3.7% rise in revenue. This is according to the Unaudited Financial Statements for the period ended 30 September 2020 released to the Nigerian Stock Exchange on Thursday.
Revenue grew by 3.7% Year on Year (“YoY”) to ₦6.0 billion in 9M 2020, on account of strong volume growth of 10.8% YoY despite the COVID-19 related disruptions in April and May. 9M 2020 revenue improvement was driven by a strong Q3 performance, with revenue growth of 33.7% Q-o-Q.
Gross profit of ₦2.7 billion was achieved in 9M 2020, reflecting a decline of 2.1% YoY due to input cost escalation from supply chain disruptions, inflation and currency devaluation. EBIT for 9M 2020 is ₦1.2 billion.
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Profit before tax of ₦1.4 billion was achieved in 9M 2020, reflecting a decline of 850 basis points on Profit Before Tax margin due to the decline in operating profit; and a 40.6% decline in net finance income due to lower investment income yields compared to prior year.
Total profit for the period was ₦928 million in 9M 2020, a 24.4% decline from ₦1.2 billion reported in 9M 2019. Earnings per share for the period was 133 kobo, down 24.0% from 175 kobo in 9M 2019.
Operating Cash Flow for the period was ₦285 million in 9M 2020, compared with ₦424million in 9M 2019. The company continues to maintain a strong cash position of ₦4.97 billion with a 15.0% growth in cash and cash equivalents between Dec 2019 and Sep 2020 which provides a buffer for operational requirements. Still, we continue to evaluate various opportunities and plan to invest for growth.
Assets; Chemical and Allied Products Plc has a total assets rose to N7.819 billion as at 30 September 2020, from N6.761 billion in 2019. The major component of the company’s assets are
- Cash and cash equivalents – N4.972 billion
- Inventories – N1.107 billion
- Property, plant and equipment – N831.798 million
44.11% of the total assets is funded by equity (N3.449 billion) while 55.88% is funded by liability (N4.369).
Equity price: At the time of this report, CAP is down by 1.07% and is trading at N18.50 per share on the floor of the Exchange.
YTD the share price is down by 22.08% while in 2 years and five years it has lost 42.46% and 50.79% of its value respectively.
Commenting on the performance, Managing Director, David Wright, stated: “In the last quarter of 2019, CAP embarked on a new growth strategy focused on creating value for our shareholders and we are encouraged by the top line growth thus far. CAP’s performance in 2020 has been affected by COVID-19, particularly in April and May as a result of the stringent movement restrictions which constrained production and led to supply chain disruptions.
“Despite the challenging operating environment, we achieved strong revenue and volume growth of 34% and 34.6% respectively in the third quarter of the year. Going forward, we expect to continue to see the positive effects of our growth strategy on our sales and remain focused on managing operating costs to deliver on profit ambitions in the fourth quarter.”
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. The company manufactures and sells premium and standard paints and coatings and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria.
The company pioneered the colour centre concept in Nigeria in 2005, which contributed the evolution of the Nigerian paint industry. Today, CAP has 76 colour centres and colour shops across 31 states. The company generated revenues of N8.41 billion in 2019. 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.
By; Ifunanya Ikueze
