CAP Plc lost the top speed growth with which it traded in the prior financial year and made just an upward creep in profit from N2.4 billion in 2022 to N2.5 billion in 2023.
That was just good enough to prevent the bottom line from looking down again after recovering from a three-year rundown that bottomed in 2021.
The chemical and paint manufacturing company had jerked up after-tax profit from a nine-year low of N1.1 billion in 2021 to roughly N2.4 billion in 2022 but that operating strength eluded it in 2023. The company’s audited financial report for the full year ended December 2023 shows that one of its main operating challenges in the year was a drastic slowdown in sales.
Sales revenue decelerated in the year from an over 35 percent rise in 2022 to a 24.4 percent improvement to N23.9 billion in 2023. The weak revenue growth was further extended by an accelerated growth in production cost, which consumed much of the revenue gains in the year.
Cost of sales sped up from an increase of 20 percent in 2022 to a growth of 28.4 percent to almost N15 billion in 2023 and the increased production cost per unit of sales means that the cost of sales claimed much of an increase of N4.7 billion in turnover in the year.
With the resulting loss of margin, gross profit cooled off from an increase of 67 percent to N7.6 billion in the preceding year to an 18.4 percent improvement to close at N9 billion at the end of 2023.
Two other major rising costs pressured earnings more and constrained margins. These include selling and distribution expenses that grew by 23.6 percent to N2.4 billion and administrative costs that rose by 37 percent to roughly N4 billion.
A bit of relief came from other income, which jumped by over 112 percent to stand at N533 million for the full year. It was however insufficient to remedy the heightened pressure from costs. The operating profit therefore edged up by 4.8 per cent to N3.2 billion compared to the doubling of operating profit to N3 billion in 2022.
Some strength was injected from finance income that advanced by 78.4 percent to N681 million as well as a low finance cost of N155 million. Net finance income therefore jumped from N348 million to N526 million over the review period.
The net finance income advantage of the company reflects further deleveraging of its already low debt content balance sheet. It slashed its borrowings from N735 million in 2022 to less than N40 million at the end of 2023.
The company ended its 2023 operations with a pre-tax profit of N3.8 billion, up from N3.4 billion in the prior financial year while after-tax profit improved by 5.8 percent to N2.5 billion over the same period.
This is a major loss of the growth momentum from the marked increases of 99 percent in pre-tax profit and 112 percent in after-tax profit the company achieved in 2022.
CAP closed 2023 trading with earnings per share of N3.09, improving from N2.92 per share in the preceding year and its directors have announced a cash dividend of N1.55 per share to shareholders.
