[upme_private]NAHCO Plc (NAHCO:NL) released its 2013 H1 results showing revenue increased 21% to N3.8billion (2012 H1: N3.1billion). Cost of Sales rose 50% to N2.3billion YoY contributing to a 7% drop in Gross Profits to N1.5billion. The company post an operating profit of N280million (2012 H1: N356m) despite being able to hold cost almost flat YoY to N1.2billion. Pre-tax profits at the end of the period rose 19% to N508million when compared to the same period last year. The result also revealed a 27% increase in Earnings per share of 25kobo.
- Income from sources other than the core operations of the company rose 276% which was the reason why the company faired better this half year when compared to prior half year.
- Interest Expenses also increased this half year to N157m (2012 H1:N44m) as the impact of the N2.2billion begin to take a hit on the company’s operations
- The company still boasts of a non debt financed cash in the bank of N1.1billion despite spending N473m in the first half of the year on investments
- The company was only able to reduce trade debtors by 5% during the period signalling struggle to recover cash from its customers. In contrast it also reported a rise in trade payable of 25%. This makes the cash balance look a bit like a debt only that its from its creditors. That is why net working capital is just over N50million
- NAHCO board recently approved a capital raising effort of N25billion which might involve a mix of debt, quasi debt or equity financing. The wish to diversify into power, expand their African operations hoping it will help create value down the line
- A N25billion injection of new funds will more than double the company’s total assets. It is uncertain to me for now if the company has enough operational capacity to handle such funds. For example, its asset turnover of just 33% indicates their low ability to effectively make use of its assets to drive revenues.
- NAHCO ‘s share price was N6.8 as at Blog time.
- The company stock was on my radar for an entry price of no more than N4.3.
- Bottom Line; the company is struggling to stay profitable
NAHCO Plc released its 2013 HI results in the website of the NSE[/upme_private]