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Aluminium Extrusion profits surge 37.19% on focus strategy

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In spite of the economic challenges in Nigeria, Aluminium Extrusion Industries plc, a company that manufactures extruded aluminium products, started the year on a stellar good note. The company was able to translate top-line impressive performance into bottom-line growth as revealed by analysis.

For the first three months of the year, Aluminium Extrusion grew revenue by 14.91 percent year-on-year (yoy) to N505.13 million from N439.57 million in the same period of the prior year (Q1 2013).

Profits before tax (PBT) rose by 8.12 percent to N19.07 million in Q1 2014, compared with N17.63 million in Q1 2013.

Profit after tax (PAT) also followed the same bottom growth trend as it surged by 37.19 percent to N16.37 million in Q1 2014, as against N11.93 million as of Q1 2013. This is an impressive result considering the unfavourably economic conditions faced by companies operating in the industry.

Analysts are calling on government to formulate vital policies that will save the sector from imminent collapse, which could be colossal on the Nigeria economy.

Furthermore, the unfair competition from China is hindering the ability of local producers of aluminium to increase their share of the market.

Net margin, a measure of efficiency and profitability in the review period, increased to 3.24 percent from 2.71 percent as of Q1 2013. Operating expenses were up 15.11 percent to N27.95 million in Q1 2014, compared with N24.28 million, while operating expense margin remained flat at 5 percent.

Huge cost of raw material may have caused cost-of-sales margin to be as high as 87 percent in the review period.

Aluminium Extrusion total assets were down slightly by 1.78 percent to N1.65 billion in Q1 2014, from N1.68 billion as of Q1 2013.

The current ratio, which measures the ability of a company to meet its short-term obligations when due, stood at 1.3 xs, which is below the 2.1x industry average.

It should be noted that the 17 million housing deficits and the new mortgage refinancing scheme by the Federal Government of Nigeria will spike the demand for roofing sheets, meaning that Aluminium Extrusion is undoubtedly in a growth spurt. With steady cheap alternative electricity supply such as gas, investment in innovation and technology, the company will boost efficiency and revenues.

Earnings per share jumped to 7k in Q1 2014, compared with 5k as of Q1 2014, representing an increase of 40 percent.

Return on average equity in the review period was 9.86 percent, while the return on average assets stood at 16.96 percent – one of the highest in the industry.

Share performance and outlook

The company’s share price closed at N10.50 on June 9, 2014, on the floor of the Nigerian Stock Exchange, while market capitalisation stood at N2.31 billion.

Article Credit: Businessday

Updated 5 Years ago

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Tags:     Aluminium     Extrusion     profits