Many Nigerians are consumers. This is especially so for those with disposable income. To meet their insatiable consumer needs, companies (both local and international) constantly manufacture different types of products targeted at them. A perfect example of such companies is Austin Laz & Company Plc whose many product lines range from ice block making machines to aluminium roofing sheets and disposable plates.
Apparently, Austin Laz is a very prolific manufacturer. It is also a small-capitalised entity on the Nigerian Stock Exchange (NSE), especially when compared with bigger companies such as the NSE 30. Yet, this company plays an important role in the Nigerian economy.
But what investors are interested in knowing is whether this company, which can best be described as a jack of all trades, is just as profitable. It would make common sense that when a company is diversified it would have multiple streams of income and as such be very profitable. But is this the case with Austin Laz?
As the focus of this week’s Nairametrics company profile, this article will help readers learn more about Austin Laz, as well as the investment opportunities inherent in it. In other words, you will read about the company’s history, business model, products, ownership structure, and competition. Most importantly, we will be looking at whether this company is profitable, bearing in mind its many product lines.
About Austin Laz & Company Plc: Its history and business categories
Headquartered in Benin City in Edo State, Austin Laz is a Nigerian manufacturing company which is specialised in the production of both industrial and domestic goods. It manufactures and distributes thermoplastic and building materials.
Initially incorporated in 1982 as a private limited liability company, the company began operation as the first major manufacturer and distributor of ice block making machines in Nigeria. Back then, there was a huge demand for ice blocks in the country, a need which Austin Laz recognised and ensured to take advantage of.
As the years quickly rolled by, the company continued to identify other related areas of needs whilst taking advantage of them all. For instance, it expanded further into thermoplastics in 2002 by producing coolers which are widely used utensils in Nigeria for the purpose of either retaining heat or cold. The company also began manufacturing ice cream machines as well as assorted plastics, including disposable plates, cups and spoons which are typically used at parties.
By the year 2005, Austin Laz & Company Plc had diversified further into the production of aluminium products, ranging from corrugated aluminium roofing sheets to PVC windows.
From the foregoing, it can be seen that Austin Laz & Company Plc’s business model can be broadly categorised into two: thermoplastics and aluminium products. These products are used mainly for domestic and industrial purposes.
Meanwhile, information available on the company’s website has it that there is a total of four subsidiaries namely:
- Austin Laz Engineering (Refrigeration)
- Austin Laz Building Materials (BMT)
- Austin Laz Thermoplastic Coolers and Warmers, and
- Austin Laz Aluminum Roofing sheets
Moving on, Austin Laz converted to a publicly-quoted company in 2011. By 2012, its securities were listed and traded on the Nigerian Stock Exchange (NSE). According to information made available by the company, some 1,079,860 units of shares were held by a total of 370 Nigerians as of December 2017.
Some of the company’s products are listed below:
- Royal metrotile Roof
- Glazed Roofing Tile
- First Lady Coolers/Warmers
- Ice Cream Machine
- PVC Window
- Aloo36p Model, etc.
The company’s ownership structure
According to information contained in Austin Laz & Company Plc’s 2017 full year financial report, there are only three substantial shareholders, each of whom owns a total of one hundred million (100,000,000) units of shares each. These shareholders are Unibake Ltd, Resort Securities Ltd, and Arin Labs Int’l Ltd.
What market audience does Austin Laz target?
The company targets a diverse group of consumers, including end users and industrial users. For instance, its coolers are targeted at average Nigerian mums, many of whom have at least one large or medium-sized cooler in their kitchen store. The coolers are also targeted at food vendors and caterers because they need to keep their foods warm.
In the same vein, the plastic/disposable plates, cups, and cutleries are targeted at food vendors and party caterers. They need these products in order to advance their businesses.
Meanwhile, the ice machine and ice block making machines are also targeted at ice cream makers in fast food restaurants, as well as ice block sellers.
The company’s corrugated aluminium roofing sheets and PVC windows are targeted at homeowners, real estate developers, and generally, operators in the building construction industry.
The company’s board of directors
The board of Austin Laz & Company Plc is comprised of six key members, including the Chairman, Dr Pat Utomi, and the CEO/Vice Chairman, Dr Austin Lazarus Asimonye. Others include Barrister Mrs. C.O. Asimonye (Director), Barrister Ifeanyi Offor (Director), Engineer Charles Odita (Director), and Dr Oguike Tempe.
Is Austin Laz & Company Plc faced with any competition?
Yes, there are competitors dragging market share with Austin Laz, especially in the building material segment. Some of these competitors include First Aluminum Nigeria Plc, Aluminum Extrusion Industries Plc, Sparkle Aluminium Company, Mathelise Aluminium Limited, Tower Aluminium Nigeria Plc, etc. These companies are major players in the aluminium industries, manufacturing and distributing various types of aluminium products, including roofing materials. They all, therefore, constitute a huge competitive threat to Austin Laz.
A look at the company’s financial performance
As we noted earlier, Austin Laz is a relatively small company compared to others with a market capitalisation of just ₦2.26 billion. Being a small-cap firm, it is not surprising that this company’s revenues and profits are simply counted in millions instead of billions.
But its small-cap status notwithstanding, the truth is that this company’s financial performance has not been favourable. For instance, according to its recently reported financial statement for the period ended September 30th, only a total revenue of ₦297.1 million was recorded alongside a loss after tax of ₦25.3 million.
It makes for a rather curious case that even though Austin Laz has a really diversified business operation, it still struggles to maintain profitability. Attempts to determine what exactly is responsible for the absence of growth proved difficult. This is because generally, the company’s financial reports are not comprehensive and lack some vital information, including the Chairman’s usual explanation of financial performance. Moreover, there is no information about segments’ performances which would have helped to determine if there is a segment that is slowing growth.
Meanwhile, there are possibilities that the company’s underperformance is due to a protracted legal dispute which involved the Bank of Industry. In a July press statement signed by the company’s Secretary, Mr Ifeanyi Ofor, it was disclosed that the company had finally regained control of a vital production plant which had been sealed off for four years. Apparently, a loan deal gone awry had necessitated the sealing-off of the property. The company said the act, which it described as illegal, “disrupted the company’s activities for over five years.”
The statement went ahead to promise that the company would bounce back now that the dispute is over. It is, however, left to be seen if this is possible. In the meantime, Nairametrics will keep an eye out to see how the company fares by the end of the financial year and beyond.