CAP reports 24.4% drop in profit

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Chemical and Allied Products Plc  has reported a 24.4 per cent decline in total profit for the nine months ended September 30, 2020 at N928 million from N1.2 billion reported in nine months 2019 no thanks to input cost escalation from supply chain disruptions, inflation and currency devaluation.

The result released at the Nigerian Stock Exchange on Thursday showed that earnings per share for the period was 133 kobo, down 24 per cent from 175 kobo in nine months 2019.

Revenue grew by 3.7 per cent Year on Year (YoY) to N6.0 billion in nine months 2020, on account of strong volume growth of 10.8 per cent YoY despite the COVID-19 related disruptions in April and May. The nine months 2020 revenue improvement was driven by a strong Q3 performance, with revenue growth of 33.7 per cent Q-o-Q.

Gross profit of N2.7 billion was achieved in nine months 2020, reflecting a decline of 2.1 per cent YoY due to input cost escalation from supply chain disruptions, inflation and currency devaluation.

EBIT for nine months 2020 is N1.2 billion. EBIT margins whilst strong at 19.5 per cent represents a decline of 610 basis points YoY due to the impact of gross profit compression mentioned above, and budgeted staff cost increases driven by deliberate initiatives to strengthen the work force.

Profit before tax of N1.4 billion was achieved in nine months 2020, reflecting a decline of 850 basis points on Profit Before Tax margin due to the decline in operating profit; and a 40.6 per cent decline in net finance income due to lower investment income yields compared to prior year.

Total profit for the period was N 928 million in nine months 2020, a 24.4 per cent decline from N 1.2 billion reported in nine months 2019. Earnings per share for the period was 133 kobo, down 24 per cent from 175 kobo in nine months 2019.

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 per cent and 34.6 per cent 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.”

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.

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 per cent of the company’s shares.