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Company Results

Vitafoam’s 2020 oncourse to make light–work of 2019

With 9 months into 2020 accounting year, VITA FOAM already boosts a profit of N2.1billion.

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Vitafoam Nigeria Plc, Vitafoam returns to a 5-year high

VITAFOAM Nigeria Plc closed what is their third quarter in June 2020 by declaring a net profit of N2.1billion, a net cash flow position of N3.9billion and a balance sheet of N18.4billion.

Being the only publicly quoted mattress and foam producing company on the Nigerian Stock Exchange, a peer to peer analysis to ascertain the true extent of its performance in comparison with its competitors is a herculean task.

This notwithstanding, VITAFOAM which has existed through five decades since 1962 has the reputation of being a leader in its industry, given its longevity and popularity amongst the Nigerian Populace. It however has a very strong competitor in MOUKA.

READ: BUA Cement Plc posts impressive unaudited H1, 2020 financial results

VITAFOAM was established on Aug 4, 1962, by British Vita and Unilever and listed in the floor of the Nigerian stock exchange in 1978. It is based in Ikeja Lagos and is currently Nigeria’s foremost manufacturer of premium polyurethane foam products, specializing in the sale of mattresses, pillows and bedding, furniture and upholstery products.

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Its books are prepared on an accounting period that runs through September till August making April till June its third Quarter.

Financial position and performance ratios 

VITAFOAM has a healthy balance sheet of N18.4billion. Its total liabilities stand at N10.8billion producing a Debt to Asset Ratio of 36.84% meaning it is not highly-geared and has the capacity to incur more debts in furtherance of its capital expansion drive. It has a Price/Earnings ratio of 2.44.

READ: CBN says 22 banks to restructure over 35,000 loans due to COVID-19

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Current ratio is perfectly pegged at 2:1 which meets the benchmark specification while Acid-test ratio; a more pertinent measure of the ability of a business to meet its short term obligations as they fall due stood at 1:1, again meeting the benchmark.

Property Plant and Equipment (PPE) increased from the N2.7billion it closed 2019 with, to N5billion in the 9 months leading to June 2020.

Profit or loss statement analysis

In the 9 month period, VITAFOAM generated a revenue of N16.5billion, 5.7% less than the N17.5billion achieved in the corresponding period of 2019.

Whist the top-line may have decreased y/y, bottom line surged. Profit after Tax for the 9 month period doubled the preceding years’ numbers. N2.1billion was generated in 2020 while N1.1 billion was generated in 2019.

READ: Unity Bank posts N44.5 billion as gross earnings in 2019

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Cost of sales this time racked up 56.7% of revenue, moving from the 66% percent in 2019 y/y. Rising costs have hitherto being a discussion point for VITAFOAM, making the improvements shown in this period under review truly commendable.

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Other cost components such as Administrative expenses and Distribution expenses remained at par and accounted for immaterial differences when compared to the corresponding period but combined, constitute a fair 22.8% of revenue.

READ: BUA Cement shows resilience to marginally improve bottom line

Quarter 3 review 

Operating activities ended with a negative net cash flow of N977million highlighting their inability to generate sufficient cash and cash equivalents from its core operation in the quarter. Investing activities had a negative net cash flow position of N73million with financing activities generating the only positive at N1.2billion.

Revenue in the quarter reached N5billion but net income pegged at N440million with a profit margin of 8.75%

VITAFOAM has threaded a topsy-turvy path in this decade making 3 straight losses from 2015 until 2017. N71.9million in 2015, N32million in 2016 and N127million in 2017. It upended the sad trajectory with a profit of N601million in 2018, fully and immensely banishing ghosts from its horrid past in 2019 with a commanding profit of N2.4billion.

With 9 months into 2020 accounting year, VITAFOAM already boosts a profit of N2.1billion. You don’t need clairvoyance nor be an astute betting-man to expect a closing bottom-line in the next quarter that could make light work of 2019.

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Ekene Onyeama is a Chartered Accountant currently plying one of the Tier one Banks in Nigeria. He started out his career at Ideascorp Limited, a private company in the hospitality industry where he served as the accountant before switching to banking. Ekene enjoys analyzing companies. He likes to write and is very excited by company valuations. He can be reached on Twitter @Ekenergy_

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Company Results

Trans-Nationwide Express Plc suffers N79 million loss in Q3 2020

Trans-Nationwide Express Plc has recorded a loss that amounts to the tune of N79 million in Q3, 2020.

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Trans-Nationwide Express Plc, Trans-Nationwide Express Plc appoints new Managing Director 

Trans-Nationwide Express Plc, a logistics and courier service company in Lagos, Nigeria, suffered N79 million loss in the third quarter of 2020.

This disclosure was based on the Q3 2020 financials sent to the Nigerian Stock Exchange on Wednesday.

READ: NIPOST’s new charges could have ruined the e-commerce/logistics industry

Breakdown

  • Revenue declined by 7.5% Year-on-Year, from N548.3 million as of the corresponding period last year to N507.17 million this year.
  • The dip was largely due to a decline in revenue from courier services, which contributed about 54.1% of the total revenue as of Q3, 2020.
  • The revenue from courier services declined from N326.44 million to N274.40 million for the period under view.
  • On the contrary, other revenue churning segments like Freight income, logistics income, internal mailing income, and warehouse all recorded a positive outlook, as they all grew viz-a-viz last year’s figures.
  • Gross profit declined by 7.1% from N321.23 million to N298.40 million in the period under view.
  • Administrative expenses increased by 17.5% from N321.0 million to N377.1 million within the period under view.
  • Cash received from customers recorded a dip from N542.28 million to N523.07 million, indicating a slip of about 3.5%.

READ: BRT owners, Primero says they lost N100 million to #ENDSARS violence

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What this means

The pandemic affected several businesses and sectors, the transportation and logistics sectors were not exempted. The loss might have been largely due to the period of economic inactivity, due to embargo on inter-state and international travels.

The high cost of maintenance, coupled with little or no revenue in those periods also played a major part.

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READ: PZ incurs N1 billion in exchange rate loss 

READ: Lafarge Africa Plc: Increase in cement sales boosts revenues

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Company Results

Total Nigeria Plc records 344% rise in PAT for Q3 2020

Total Nigeria Plc recorded an 881% rise in Profit Before Tax (PBT) for the period under view.

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Total SA, Crude

Total Nigeria Plc recorded N500.12 million as Profit After Tax in Q3 2020, against the N204.84 million loss it suffered in the corresponding period last year – a 344% increase.

The information is contained in a recent disclosure sent to the Nigerian Stock Exchange Market today.

READ:  Nigeria’s Foreign Trade hits N9.18 trillion in Q3, as non-oil export rose by 374.5%

In addition, it also recorded an 881% rise in Profit Before Tax (PBT) for the period under view, as PBT increased to N912.89 million, against N116.95 million loss recorded in the corresponding period last year.

READ: Analysis: A better way to price Guinness shares

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On the contrary, revenue during the period under view declined by 32%, from N221.84 billion recorded in Q3 2019 to N151.71 billion in Q3 2020.

READ: Flourmills posts impressive Q3, sustains recovery in 2020 financial year

READ: GTBank revenue for H1, 2020 rises to N225.14 billion

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What this means

The reason for the mixed result in terms of the dip in revenue and a non-corresponding increase in profit is largely due to a drastic reduction in costs. This simply means that the firm was able to manage its costs very well despite recording lower revenue.

READ: NPL: Banks recover N738.15 billion from oil and gas sector in Nigeria

For example, the firm was able to do the following:

  • Reduce its cost of sales to about N66.06 billion, from N196.74 billion as of Q3 2019 to N130.68 billion in Q3 2020 – indicating a 33.6% reduction.
  • Reduce its finance cost by 58.25% and increase its finance income by 664.3%.
  • The number of staff also reduced by 6%, hence impacting administrative costs.
  • Interest on bank loans and overdraft remarkably declined by approximately 64.0%.
  • On the flip side, the impact of the lockdown period, due to the spread of the pandemic, affected the revenue of the firm, which may have accounted for the 32% dip in revenue for the period under view.

READ: Analysis: Lafarge Africa Reports N30 billion Loss In 6 Months

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READ: Guinness Nigeria Plc jostles to improve from its insipid 2020 financial year

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Company Results

MTN Nigeria posts N975.76 billion revenue for Q3 2020

MTN Nigeria has recorded total revenue of N975.76 billion for Q3 2020, moving up from N856.549 billion recorded in the corresponding period in 2019.

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MTN Nigeria, MTN Nigeria Communications Plc. begins N100 billion commercial paper issuance today

MTN Nigeria has recorded a 13.9% boost in its total revenue for Q3 2020, as it recorded total revenue of N975.76 billion this year, up from N856.549 billion recorded in the corresponding period last year.

This is according to its updated financials available on the Nigerian Stock Exchange Market.

  • Operating profit also increased by 7.8% from N284.73 billion in Q3 2019 to N307.01 billion in Q3 2020.
  • The growth in operating profit was largely impacted by the increase in finance costs as a result of increased borrowings (September 2019: N381 billion, September 2020: N509 billion), leading to a decline of 0.6% in profit before tax to N211.6 billion.

READ: MTN, Glo, Airtel, 3 others increase assets by N804.09 billion

What you should know

The following are key metrics which impacted the Q3 2020 figures posted by the firm:

  • Mobile subscribers increased by 3.9 million to 75million.
  • Active data users increased by 1.7 million to 30.7 million.
  • Service revenue increased by 13.9% to N973.8 billion.
  • Earnings before interest, tax, depreciation, and amortization (EBITDA) grew by 9.1% to N497.9 billion.

(READ MORE:IGR: States generate N612.9 billion in H1 2020, dips by 11.7% )

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  • EBITDA margin declined by 2.3 percentage point (pp) to 51.0%, due to cost pressures arising mainly from increased investments in the firm’s network and the impact on costs of the depreciation to the CBN and NAFEX exchange rates.
  • Profit before Tax (PBT) declined by 0.6% to N211.6 billion.
  • Earnings Per Share (EPS) declined by 3.3% to N7.1 kobo

READ: Football: Manchester United net debt rises by 133% to £474.1million

READ: Football: Lyon lost €36.5 million in the 2019/20 financial year

What they are saying

Commenting on the rationale behind the revenue growth in the latest financials posted by the firm, the CEO of MTN Nigeria, Ferdi Moolman, said, “Following a decline in voice traffic and an acceleration in data during lockdowns in Q2, we have seen a normalization of traffic as restrictions have been removed, with a recovery voice traffic and continued growth in data. This has supported a 13.9% growth in service revenue, with an acceleration of growth to 16.5% in Q3 specifically.”

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