Nascon Allied Industries Plc maintained the high-speed growth on the earnings track seen in the first quarter and multiplied profit about four times to N5.8 billion at the end of half-year operations.
Earnings growth of the salt manufacturing company accelerated in the second quarter when after-tax profit jumped from N1.6 billion in the first quarter to N4.1 billion in the second.
The company’s half-year interim financial report shows that rising sales combined with slowing costs have yielded elevated earnings performance so far this year.
Turnover grew from about N17 billion in the first quarter to over N21 billion in the second quarter and production costs stayed down. That gave the salt producer the key operating advantage of outstretched margins during the period.
The company is experiencing strong earnings elevation for the second year after lifting the bottom line a clear 84 percent to about N5.5 billion in the preceding financial year. The last year’s closing profit figure has therefore been exceeded by the half-year.
Increased revenue inflows in the second quarter were accompanied by a relative slowdown in production costs. Input costs increased by 5 percent to a little over N9 billion in the quarter compared to 48 percent growth in sales.
Accelerated sales with a slowdown in production costs resulted in an outstanding growth of 116 percent in gross profit in the second quarter, amounting to N12 billion.
Operating pressure came from distribution and administrative expenses both of which grew strongly in the quarter but with the cost savings from production costs, the company still raised operating profit three and half times to N6.2 billion.
Net finance costs stayed low at N60 million, which left pre-tax profit almost as good as operating profit at roughly N6.2 billion for the second quarter. The second quarter produced 72 percent of the half-year figure.
The company’s half-year earnings figures reflect strong revenue performance that powered the bottom line. While costs grew, the increases were not strong enough to break the speed of profit advances.
The company’s management successfully escaped the exchange loss that prevailed in the industrial sector in the second quarter, which could have punctured its high growth speed.
It closed half-year operations with a turnover of over N38 billion, which is an increase of close to 52 per cent year-on-year.
Cost of sales grew at a significantly lower pace of 14.6 per cent to over N19 billion over the same period, which powered an increase of 126.5 per cent in gross profit to almost N19 billion at half year.
The claim of input cost on turnover went down from 66.7 per cent in the same period in 2022 to 50.3 per cent at the end of half-year operations.
Rapidly growing distribution cost remains a challenge to the company, growing well ahead of sales revenue at 65 per cent to over N8 billion compared to the 52 per cent growth in sales.
Administrative expenses moderated at an increase of 39 percent year-on-year to over N2 billion and operating profit jumped by almost 273 percent to N8.8 billion at the half year.
The company reaped a major increase of 128 percent in finance income to N309 million, which kept net finance cost minimal at N177 million at the end of half-year operations.
Nascon Allied’s borrowings are slightly reduced from N8.5 billion at the end of 2022 to N8.2 billion at half year.
The company posted a pre-tax profit of N8.6 billion at the end of June 2023 and an after-tax profit of N5.8 billion for the period. The figures represent outstanding growth of 280.7 percent and 280.4 percent respectively.
Net profit margin advanced from 6.1 percent in the same period last year to 15.2 percent at the end of the half year. The combination of advancing sales and widening profit margins remains the key operating advantage for Nascon Allied so far this year.
The company earned N4.39 at half year in June 2023, rising from N1.16 per share in the same period last year.
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