By Dipo Olowookere
The earnings of CAP Plc in the first quarter of 2021 were not impressive and the company blamed this on the global shortage of raw materials.
In the period under review, the revenue generated by the firm dropped by 9.5 per cent to N2.1 billion from N2.3 billion, while the gross profit reduced by 39.9 per cent to N701.0 million from N1.2 billion, with the other operating income down to N24.0 million from N28.0 million.
The company, which majorly deals with chemicals and plans to merge with Portland Paints, said it was able to cut down its administrative expenses by 2.3 per cent in the first three months of this year to NN413.0 million from N423.0 million in the same period of last year, while the operating expenses went down to N488.0 million from N597.0 million, with the Earnings before interest and taxes (EBIT), which measures a company’s profitability, down to N237.0 million from N598.0 million.
With a net finance income of N62.0 million in Q1 2021 as against N74.0 million in Q1 2020, the profit before tax decreased o N299.0 million from N672.0 million in the same period of last year, while the profit after tax slumped to N203.0 million from N457.0 million.
“In the first quarter of 2021, we saw the biggest impact of the COVID-19 pandemic on our business. Increased global demand for chemicals driven by the economic rebound in Asia and feedstock challenges, with several suppliers declaring force majeure, resulted in a global shortage of raw materials.
“This significantly impacted product availability in the first quarter of the year.
“In addition, there was a scarcity premium placed on all available raw materials which eroded gross margin across various product lines,” the Managing Director of CAP, Mr David Wright, explained.
“We have taken steps to secure alternative raw material sources and are increasing inventory levels to mitigate against further disruptions,” he assured.
“As such, we expect a strong recovery in the remaining quarters of the year.
“Our focus remains on creating shareholder value and we will continue to pursue attractive growth opportunities to achieve this,” he further stated.
Adedapo Adesanya