[upme_private]Vitafoam Plc (VITAFOAM:NL) released it 2013 9 months results showing revenue increased 16.4% to N12.9billion (2012 H1: N11.1billion). Gross profit also increased 15% to N4billion in the period under review. Pre-tax profits at the end of the period was N713million, 13.8% higher than the N626million posted in 2012.
- In my last review on BSH Vitafoam I had hoped the company will be able to keep interest rates below 40% of Operating profits. The company failed to achieve this having only posted interest rates of 42% of Operating profits.
- Operating expenses (S,G&A) also came in high at 74.6% of Gross Profits. However this figure was lower than the 74.9% it posted same period last year. Gross profit margin however declined slightly by 0.4% year on year.
- Operating expenses is made up of N2.3billion and N678million in Admin and Distribution expenses respectively. The result provides no break down on what the constitute Admin expenses.
- However, relying on the prior year results, Salaries and Depreciation are a combined 34% or a one – third of Admin expenses leaving one to conclude marketing and the cost of maintaining its retail outlets constitute a major part of the rest.
- Debt to equity ratio still remains high at 100% of Equity. The short term loans of N3.5billion were mostly commercial papers which it used to replenish its stock in 2012. Long term loans were loans obtained from Zenith Bank. The company only paid down N29million in principal this period.
- Compare this to N433million that it has paid in interest during the same period. One would expect the company to apply most of the funds in at least repaying its Zenith Bank loans (which bear 19% interest rates) saving interest cost down the line.
- Vitafoam however, post Ebitda of about N1.4billion this period alone which should continue to be enough cover its Commercial Paper loans
- Vitafoam shares took a hit on the release of the results dropping to a month low of N4. It has however rallied back to N4.2.
- Vitafoam Plc is a stock in our Portfolio.
Vitafoam Plc released its 2013 9 months results in the website of the NSE[/upme_private]