Earnings Review: Vitafoam Plc H1 To March 2013

[upme_private]Vitafoam Plc released its 2013 6 months to March results with revenues rising 15% to N8.7billion (2012 H1: N7.6billion). Operating profit at the end of the period under review was N736million representing an operating profit margin of just 8.4% (2012 H1:7.8%). The company’s pre-tax profits at the end of the period was N585million 21% higher than the N484million posted same period last year. EPS therefore rose 16% to 50kobo

Key Highlights

• Gross Profit Margin Improved slightly to 30% (29% 2012 Q1) a reflection of the company’s ability to fight off rising cost of raw materials

• The rise in S,G&A expenses was 12.5% higher than prior period at N1.89billion suggesting rising operating cost as the company continues its retail presence across major cities in Nigeria.

• The company is currently highly leveraged with debt covering 99% of Equity. However, it appears from the company’s cash flow statement it generates about N1.6billion in Ebitda (TTM) which I believe is enough to cover its debt obligations. 

• The short-term debts is made up of overdrafts of N900m and commercial paper of about N2billion.

• The long term debt should be completely repaid at the end of the current financial year

• The company’s return on average equity of 13% in line to achieve an annual return of 26% at the end of the year.

• The company’s tax rate remains high at about 30% of PBT

• The share price rose 5.4% to N3.48 at the end of the period. The share price has a current P.E of about 5x Trailing Twelve Months (TTM) EPS

• Vitafoam has consistently paid dividend over the years.

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Vitafoam Plc 2013 H1 results was posted on the website of the NSE.[/upme_private]