10 August 2018 : Notore Chemical Industries Plc released its rather disappointing unaudited nine months ( ending June’18 ) yesterday. The Chemical company gained a lot of fame when it listed 1.61 billion ordinary shares of 50 K at N 62.50 per share on the Nigerian Bourse, thus skyrocketing the market cap of the equity sector by N 128 billion. But, look like it already enjoyed its 15 minutes of fame, and now is under scrutiny following the release of its scorecard.
According to the nine month statements, the group started off on an unsatisfactory note, after observing a 20% revenue decline from N 25.8 billion to N 20.58 billion. This revenue decline can be mainly blamed on the decrease in revenue across all its segments- NPK did not generate any revenue in the nine month period ending June’18 compared to a N 868,000 revenue generation in the nine month period ending June’17. Moreover the group observed a 20% revenue decline in the Urea and other chemicals segment and a 28% dip in the Ammonia segment in the current period ad compared the the nine month period ending Jun’17. In terms of geographic location, their revenue obtained from within Nigeria dropped by 15%, while that from outside Nigeria dropped by a whopping 92%, in the current period as compared to the nine month period ending Jun’17.
They tried to save the day, by reducing their cost of sales by 33%, mainly by curbing their haulage costs. Consequently they enjoyed a Gross Profit increase of 14% from N 7.1 billion in 9 m ending Jun’17 to N 8.1 billion in 9 m ending Jun’18.
But, they then witnessed a 7% decline in operating profit, from N 4 billion to N 3.7 billion, fueled by increase in selling and distribution cost ( mainly due to a hike in their marketing expense ) coupled with a reduction in their “other income”. Then to make matter worse, they revealed an enormous net finance cost of about N 7.6 billion. Obviously they witnessed a loss before tax of N 3.9 billion, which is a 6% increase in loss from the previous 9 m period ending June’17 which exhibited a loss before tax of N 3.7 billion.
Due to no income tax expense/ credit, their Loss after tax or loss for the period is equivalent to their loss before tax and is equal to N 3.9 billion and similarly a 6% decline from the previous comparable period.
Their other comprehensive income also fell by 99% which resulted in a total comprehensive loss of N 3.9 billion.
Their earnings per share( both diluted and Basic ) appreciated from N 2.3 per share to N 2.44 per share.
The group witnessed a gigantic surge of 205% in its cash and csh equivalents ( excluding over drafts ), while its cash and cash equivalents incl over drafts spiked by 107%. While its trade and other receivables went up by 145%. its trade and other payables increase by only 39.4%.The total borrowings marginally went up by 3.5%. Lastly, the group’s retained earnings balance at the end of the period showed a 19.8% increase in loss.
The share currently trades at a share price of N 62.5.
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