Managing Director, Julius Berger Nigeria Plc, Wolfgang Goetsch says the company forecasts a 45 percent jump in 2018 revenue as the country recovers from a 2016 contraction and as the foreign-exchange market stabilizes.
The construction company says it expects revenue to grow to ₦210 billion, to be spurred by government contracts valued at ₦500 billion ($1.4 billion)
Projects currently being undertaken by the company include building access roads in Abuja’s central business district, roads and civil works at Dangote Group’s oil refinery now under construction in Lagos and the construction of the 2nd Niger Bridge.
The company saw its earnings reduced as Nigeria suffered its worst economic contraction in 25 years in 2016 as a slump in the price of oil, its main export, caused foreign-currency shortages.
After a ₦2.4 billion loss in 2016, the company made a profit of ₦2.57 billion in 2017, and revenue stayed at ₦141.9 billion. Also, results for the first quarter ended March 2018 show the company reported revenue of ₦35.32 billion for the period ended March 2018 compared to ₦34.15 billion reported for the period ended March 2017.
Profit before tax was ₦2.21 billion for the period ended March 2018, as against a ₦17.1 million loss before tax recorded in the corresponding period of last year.
According to the Managing Director, losses were incurred by the company as it bought foreign exchange in a volatile market, and since the exchange rate stabilized, the cost element of foreign-exchange losses is getting smaller and this has helped the company’s overall profitability.
He further revealed that the company is in talks with the government, its main debtor, as part of an effort to recover outstanding payments of about ₦60 billion.
“The government will raise bonds and these bonds will be given to the contractors and we can sell the bonds and generate cash.”
He also revealed plans to diversify its operations into the energy industry, where it has formed a partnership with petralon oil and gas firm to explore an oil field.
Julius Berger started operations in Nigeria in 1965, and it is Nigeria’s largest construction company by market value with two-thirds of its earnings from government contracts.
Its share price as at close of trading yesterday was 27.55 on the floor of the Nigerian Stock Exchange while its one year return is down by 30.88%.