Ikeja Hotel Plc has reported a profit before tax of N5.290 billion for the year ended 31 December 2024.
According to the unaudited Group financial statements reviewed by Nairametrics, the company reported revenue of N18.754 billion, a 68.75% increase from the N11.113 billion reported the year prior.
The revenue growth was primarily driven by a significant rise in room sales revenue, which amounted to N12.832 billion (68.42% of revenue), compared to N7.208 billion in the previous year.
Key highlights (2024 vs 2023 FY)
Revenue: N18.754 billion +68.75% YoY
Cost of sales: N11.214 billion +60.58% YoY
Gross profit: N7.540 billion +82.57% YoY
Sales and marketing expenses: N713 million +77.02% YoY
Administrative expenses: N1.890 billion +26.08% YoY
Operating profit: N5.133 billion +15.07% YoY
Finance cost: N1.329 billion +11.87% YoY
Profit after tax: N3.454 billion +66.53% YoY
Earnings per share: N1.60 +66.67% YoY
Cash and Cash Equivalents: N22.533 billion +53.88% YoY
Total Assets: N69.508 billion +16.31% YoY
Retained Earnings: N10.403 billion +41.21% YoY
Total Equity: N26.683 billion +13.13% YoY
Key highlights of the result
- Profit surge: This surge in profitability was supported by the faster growth in revenue compared to the increase in the cost of sales, which grew by 60.58% YoY to N11.214 billion. This contributed to a healthy gross profit margin of 40.20%, up by 8.19% from the previous year.
- Operating efficiency: While operating profit increased by 15.07% YoY to N5.133 billion, the operating profit margin contracted to 27.37% from 40% in the previous year. This suggests that despite strong revenue growth, there are ongoing cost pressures that impact operational efficiency.
- Financial health: Ikeja Hotels maintained a strong interest coverage ratio of 3.86x, indicating that its operating profit comfortably covers interest expenses. This reflects a stable financial position despite the increase in finance costs by 11.87% YoY to N1.329 billion.
- Balance sheet strength: Total assets grew by 16.31% YoY to N69.508 billion, supported by a substantial cash reserve of N22.533 billion. Shareholders’ funds also increased by 13.13% to N26.683 billion, driven by revaluation reserves and retained earnings.
- Return metrics: The return on equity (ROE) stood at 12.94%, indicating moderate returns for shareholders. The asset turnover ratio was 0.27x, suggesting room for improvement in asset utilization efficiency. Additionally, the net profit margin contracted slightly to 18.42%, reflecting the need to manage costs effectively to sustain profitability.
- Market performance: Ikeja Hotels’ share price delivered strong returns, with an 88% year-to-date return in 2024, following an impressive 471% return in 2023. This year it has gained 8.44%, ranking it 57th on the NGX in terms of YtD performance. This strong performance suggests investor confidence in the company’s growth prospects.
- Dividends: Over the past two years, the company has maintained a steady dividend per share of 7.5 kobo and currently offers a dividend yield of 0.61%. With the growth in earnings per share (EPS) to N1.60 and strong retained earnings, there is an expectation among investors for increased dividends in the future, which could further bolster shareholder value.
Overall, Ikeja Hotels Plc has shown robust growth in revenue and profitability, supported by a strong balance sheet and investor-friendly returns.
While there are areas such as cost management and asset turnover that warrant attention for further improvement, the company’s strategic positioning in the market and financial health appears promising for continued growth and shareholder value enhancement.