Under Performing Japaul Plc, Post N380million in Pre-Tax Profits For Q1 2013. A 57% Drop From 2012 Q1

Japaul Plc released its first quarter 2013 results with revenues rising 16% to N3.46billion (Q1 2012: N2.9billion). Gross profit also 10.1% to N1.87billion (Q1 2012: N1.7billion). Operating profit for the period was N723million this quarter down from N922million posted in the same period last year. Pre-tax profit for the period was N380million a 57% drop from what was posted same period last year.

Highlights

The company is still unable to deal with high cost of sales. Even though Gross Profit margin at the end of 2012 was 40.7% compared to 54% this quarter (Q1, 2013) it was higher at 57% at the end of the first quarter of 2012. This may indicate a rise in fixed cost towards the end of the year.
Operating expenses also increased 47% period the period. The company essentially spends N61 of every N100 in gross profits on selling, general and admin expenses.
The company’s operating profit was also further reduced by higher interest rates as well as lease payments. Interest rates was about N170million during the period and up from N38million a year earlier. Though the company has a low debt to equity ratio its operating profit/Ebitda is hardly adequate to cover for debt service and repayments
The company has a very low Asset Turnover of 2.2% during the quarter.In fact last year its ROA was about 2.2% as well for an industry that is associated with asset turnovers in the neighbourhood of 100%-120%. Considering the assets it had, this company is seriously under trading.
The company also had negative revenue reserves of N3.25billion. At this rate it is unlikely that the company will be able to pay profits this year.