Transcorp recovers from Q1 Profit drop, nets N16bn at H1
Transcorp Plc has remedied the 63 per cent profit drop in the first quarter with a big leap of 104 per cent in after-tax profit in the second quarter. Quarterly profit soared from N1.8 billion in the first quarter to N14.2 billion in the second, which adds up to N16 billion closing after-tax profit at half year.
The company’s unaudited accounts for the half year ended June 2023 show a major gain in operating momentum for the conglomerate in the second quarter, accelerating sales revenue and stretching out margins.
Sales jumped from N32.4 billion in the first quarter to N49.7 billion in the second quarter and the year-on-year growth rate improved from 3 percent in the first quarter to almost 58 percent in the second quarter.
The swelling of sales revenue cut across the company’s key portfolios of hospitality, power, and oil & gas with power generation leading the growth by close to 60 percent as well as amount at N41 billion.
There is also a change of direction with respect to production costs from growing way ahead of sales in the first quarter to significantly moderated growth in the second quarter. Input cost rose by 32.6 percent year-on-year to N20.7 billion in the second quarter.
The benign combination of accelerating sales and slowing cost of sales powered an increase of 82.7 per cent in gross profit to N29 billion for the second quarter.
The strong growth enabled the company to absorb an increase of 45 per cent in administrative expenses to over N8 billion as well as eight and half times jump in impairment loss on financial assets – amounting to N1.7 billion for the quarter.
Compensatory growth on the side of earnings came from other income that jumped three times year-on-year to N1.7 billion and net other gains, which surged upward from other losses of N95.5 million to over N639 million over the review period.
Operating profit more than doubled in the second quarter at 105 per cent to close at N21.5 billion.
Net finance cost grew by about 48 per cent in the second quarter to N3.4 billion while foreign exchange loss advanced from N540 million to N2.4 billion over the period.
Transcorp earned N15.7 billion of its half-year pre-tax profit of N18.5 billion in the second quarter. The closing after-tax profit of N16 billion is almost at par with the closing profit of N16.8 billion for the 2022 full year.
Sales revenue for the half year amounted to over N82 billion – which is an increase of 30.6 per cent year-on-year. Input costs grew at a slower pace of 22 per cent to roughly N39 billion over the period, which enabled an increase of 39 per cent in gross profit to over N43 billion at the end of June.
Strong growth in other income and net other gains helped the company to absorb strong increases in administrative expenses and impairment loss on financial assets. Operating profit, therefore, grew by over 46 per cent to stand at N29 billion at the half year.
There was a major increase in foreign exchange loss from N1 billion to N4.8 billion over the review period while net finance costs grew moderately at 8.6 per cent to N6.6 billion.
The company closed the half-year operations with a pre-tax profit of N18.5 billion, which is an increase of 38.6 per cent while after-tax profit grew by 33 percent to N16 billion at the half-year close.
The company closed half-year operations with earnings per share of over 27 kobo, rising from 14 kobo per share in the same period last year.
