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Revenue
The company reported revenues of N81.9billion for the year ended 2014 down 16.5% from the N98.2billion posted same period in 2013. Cost of sales for the period dropped 17% YoY boosting Gross profits by more than 7% to N3billion.
Profitability
Pre-tax profits for the period rose 79% to N1.79billion (2013: N1.07.1million). Profit after tax also rose 83% to N1.2billion (2013: N703.1million).
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Shareholders
Earnings per share attributable to shareholders for the period rose 83% t0 99kobo compared to the 54kobo posted a year earlier. .No dividend has been recommended for the year.
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There was a rise in profits quite all right but I am deeply concerned about the reduction in revenues. There is a limit to which a company can raise profits in the face of reducing revenues. They may be forced to cur corners, which will lead to the long term loss of good will.
Their inability to pay any form of dividends made me look at their cash flow, and I am also concerned there was a reduction in trading activities. Trading is the lifeblood of downstream companies in Nigeria. Also remember that Dangote is already eyeing refineries, and knowing who Dangote is, he will also be interested in the whole value chain down into the downstream.
Too many concerns about this company to be comfortable with taking a bite.
I share your view too KOD. In fact, I believe their inability to pay dividends boils down to cashflow. Nothing in their balance sheet suggest they have the financial muscle to pay dividends. It’s cautiously on our watchlist.
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