BusinessJulius Berger Posts Lowest Profit In 6yrs

Julius Berger Posts Lowest Profit In 6yrs


– Amid Shrink In Building Works

BEVERLY HILLS, January 29, (THEWILL) – Construction giant, Julius Berger Nigeria Plc, recorded the lowest profit in six years as at December 31, 2020 – no thanks to the shrink in building and construction works as the global economy battles with the Covid-19 pandemic.

The company revealed in its unaudited report submitted to the Nigerian Stock Exchange (NSE) that its profit after tax dipped to N1.35 billion for the trading year ended December 31, 2020, from N8.75 billion posted in the corresponding period of 2019, representing 83.6 per cent decrease.

Since 2014, when the construction firm posted a record profit after tax of N8.23 billion, its fortune has been a swing in high, low and negative returns that suffered two recessions.

In 2015, the profit dipped 70.35 per cent to N2.44 billion before it slumped into recession-induced loss of N3.81 billion in 2016; which later saw a slight recovery in 2017 with a profit after tax of N2.57 billion.

A jump to N6.10 billion in 2018 maintained the upward trajectory hitting an all-time high of N8.75 billion in 2019, before the slump in 2020 when it posted N1.35 billion – the lowest after 2014 results.

Revenue dipped 9 per cent to N242.45 billion in 2020 compared to N266.43 billion in the corresponding period of 2019, severely impacted by cost of sales of N198.84 billion.

Although cost of sales dropped 3.62 per cent from N206.31 billion in 2019 to N198.84 billion in 2020, the negative impact on the profit was inevitable as profit before tax declined from N13.91 billion in 2019 to N4.12 billion in 2020 – a negative change of 70.38 per cent.

Impairment loss of N2.96 billion on trade and tax receivables in 2019 was reversed to N713.77 million, apparently reflecting the lull in business attributed to the Covid-19 lockdown, #EndSARS protest and the recession.

The jump in marketing expenses from N139.63 billion in 2019 to N278.28 billion in 2020, or 99.29 per cent, explained the lull in business activities with lower returns as the company strived to maintain its level of service delivery.

This could also explain the significant drop of 48.14 per cent in finance cost to N3.63 billion in 2020 from N7 billion in the corresponding period of 2019.

Administrative expenses dropped slightly to N29.98 billion from N37.02 billion in 2020 and 2019 respectively, a decrease of 19 per cent.

The company’s earnings per share (EPS) as at December 31, 2020 was 4.79 compared to 5.72 in corresponding period of 2019.

It paid a dividend of N2.75 per share in 2019.

Its share price closed N22.65 after January 28, 2020 trading.

The Federal Ministry of Works and Housing has the highest sectoral capital allocation of N404.64 billion in Nigeria’s N13.08 trillion budget.

Minister of Works and Housing, Mr Babatunde Fashola, had said the ministry’s focus in the 2021budget is the completion of some priority road projects as most of them were affected by the Covid-19 lockdown and the #EndSARS protest.

Julius Berger is a key player in the sector.

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