[upme_private]Chellarams Plc released its Full Year to March 2013 results with revenues dropping 6.8% to N23.3billion (2012: N25billion). Gross Profit however increased slightly by 0.4% to N3.03billion. Operating profit dropped 5.8% to N585million compared to N621million in 2012. Pre-tax profits also dropped significantly to N241million (2012: N379million). Profit after tax at the end of the period was N90million a 64% drop from N251million posted in 2012. Earnings per share for the reporting period was 15.6kobo compared to 34.7kobo in 2012.
Key Highlights
- The revenue drop from N25billion to N23.3billion is the company’s first in over 6 years
- Operating cost has been on a steady increase since 2010. It sliced off 80.7% off Gross Profit during the period (2012: 79.4%). The company’s annual report is hard to come by which would have helped explained the reason for its high operating cost.
- Finance cost reduced 2.6% to N471million despite a lower debt to equity ratio in the period under review compared to the prior period. Total debt this period was about N6.4billion with N4.7billion of these currently due. Based on the company’s operating profit it is nearly impossible to meet up with fallen due obligations.
- Return on equity is apparently low churning out 2.4% in the period far below Industry Average.
- The company however has N1.5billion in retained earnings which ensures dividend payout provided it continues to remain profitable
- Chellarams continues to invest in new product lines as well as add new subsidiaries to its group. In the year under review it spent N892million in net investments in addition to the N627million it spent in the prior year. It launched a new Malt drink earlier in the year a move that I do not see reaping profits in the short term considering the competitiveness of the beverage industry. In 2012, it stopped its bicycle manufacturing division blaming the lack lustre effort of the FG in protecting local industries from cheap imports.
- Chellarams also has interest in KFC Nigeria owners, Devyani International Nigeria Limited. It appears the partnership hasn’t helped stop the haemorrhaging profit decline in the company.
- KFC as at the time of this post was trading at N4.89 per share with a P.E of 15.2x. It share price if also 1.1x its book value per share.
- Chellarams results for the year ended March 2013 is rated a RED INK
Chellarams released its 2013 FY to March in the website of the NSE[/upme_private]
