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John Holt’s Profit Beats Estimates on Reduced Exchange Loss

May 12, 2017

John Holt Plc posted full year profit that beat analyst estimates on reduced foreign exchange revaluation loss and a drop in operating expenses notwithstanding a tough macroeconomic environment.

The Nigerian conglomerate giant posted a net income of N97 million, compared to the N60 million consensus of analysts’ estimates compiled by BusinessDay.

Sales increased by 10 per cent to N2.66 billion as the company continues to consolidate on its aggressive expansion plans with a view to increasing its share of the market.

The growth of the bottom line was underpinned by reduction in Foreign exchange losses, total operating expenses and finance costs by 92 per cent, 7 per cent and 36 per cent to N528 million, N979 million and N231 million.

John Holt is efficient and profitable amid a tough operating environment as operating profit margin increased to 13 per cent in the period under review from just over 2 per cent the previous year.

The company’s cost of sales remained flat at N1.8 billion. Cost of sales ratio fell to 67 per cent in 2016 from 73 per cent in 2015.

Gross margins for the year ended September 2016 rose to 34 per cent from 28 per cent as at September ended 2015. Gross profit spiked by 36 per cent to N893 million, which means the company has managed costs directly attributable to project.

The stellar performance of John Holt is not a representation of the result of an industry buffeted by lower oil price, a weak naira, and a severe dollar shortage.

The decision of the Central Bank of Nigeria (CBN) to adopt a flexible exchange rate last year resulted in the naira losing 40 per cent of its value against the U.S currency, the dollar. The de facto devaluation of the currency reignited the dollar denominated debt in the books of some firms.

Last year was horrendous for companies in Africa’s most populous nation as the economy slipped into a recession, with a sever dollar shortage that hindered firms from importing plant and machinery to meet production demands.

Some conglomerates incurred huge production as they switched to diesel oil, a more expensive source of energy compared to gas, on the back of gas shortages

The huge energy costs up top of the spiralling cost of raw and packaging materials throughout the last year.

Analysts are optimistic of an economic recovery in 2017 on the back of higher oil price, the policy actions of the government, and the relative calm in the Niger Delta region.

John Holt’s total assets rose 10.53 per cent to N12 billion in the period under review as against N10.92 million the previous year.