CAP profit drops by 29.8%
By Kayode Tokede
Chemical and Allied Products Plc (CAP), a leading paints and decorative companies, announced its audited results for the year ended December 31, 2020 with profit dropping by 29.1 per cent.
The company profit for the year was N1.2 billion in 2020, a 29.8per cent decline from N1.7 billion reported in 2019.
The profit decline was a combined effects of lost sales during lockdown, devaluation, and supply chain disruptions.
Revenue increased 3.9per cent from N8.4 billion in 2019 to N8.7 billion in 2020, driven by strong volume growth despite the disruptions in April, May and October.
Gross profit declined 5.8per cent to N3.7 billion, with gross margin of 42.8per cent. Gross profit decline due to input cost pressures on account of currency devaluation and supply chain disruptions.
EBIT lower at N1.6 billion, largely on account of the decline in gross profit, investments in talent to strengthen the work force and fixed operating cost base despite losing 7 weeks of sales.
Net finance income declined 41.3per cent due to lower investment income yields in line with the interest rate environment.
Earnings per share of 175 kobo, down 29.7 per cent from 249 kobo in 2019. Total dividend of 210 kobo per share.
Free Cash Flow remained very strong at N1.2 billion signifying the continued strong cash generating ability of the company in spite of significant headwinds.
Commenting on the performance, Managing Director, David Wright, stated, “CAP recorded modest top-line growth last year despite the COVID-19 lockdown in the second quarter of 2020 and protests in the fourth quarter of 2020, effectively losing 7 weeks of sales.
“We are encouraged by the growth in revenue which has been solely driven by underlying volume growth in line with our strategy. Alongside the rest of the world, we experienced supply chain disruptions which impacted our raw material sourcing and resulted in input costs pressures. We have embarked on initiatives focused on mitigating these disruptions and expect to see positive results in 2021.
“We announced the proposed merger between CAP and Portland Paints and Products Nigeria Plc in the fourth quarter of 2020. We have made significant progress and expect to conclude the merger in the second quarter of 2021, subject to receiving final regulatory approvals.
“I am pleased to announce that the Board approved that a dividend of 210 kobo per ordinary share be recommended for payment to our shareholders. This will be subject to the appropriate withholding tax and the approval of the shareholders at the Annual General Meeting.”
