Chemical and Allied Products Plc Reports 51 Percent Increase in Revenue

Chemical and Allied Products Plc (CAP Plc) announced its Financial Results for the third quarter ended September 2021.

Revenue increased by 51 percent increase from N5 Billion in the quarter ended September 2020 to N9 Billion in September 2021. This rise in revenue was driven by an increase in the sale of paint products which rose from N6 Billion in 2020 to N9 Billion in 2021. Although distribution costs also rose during the period under review and this ate into the revenue earned.

Cost of sales however saw a massive increase from about N3 Billion in September 2020 to N6 Billion in September 2021. This was driven by a change in inventories of finished goods and work in progress which rose from N2 Billion in 2020 to N5 Billion in 2021. Royalty fees also increased from N201 Million in 2020 to N307 Million in 2021.

This saw profit for the period fall from N927 Million in 2020 to N613 Million despite the increase in revenue, a 34% drop.

Earnings per share fell from 133 kobo in September 2020 to 78 kobo in September 2021. The company declared no dividends during the period.

CAP Paint Key Financial Highlights

• Revenue of N9.1 billion, higher than prior year by 51%.
• Gross profit of N2.7billion million, with gross margin of 30%.
• Operating expenses of N2.2billion with operating expenses as a percentage of sales of 25%, a 179bps improvement from 27% prior year.
• Other income of N253million, 279% above prior year due to profit from sale of a non-core asset.
• EBIT of N710 million, with EBIT margin of 8%.
• Profit Before Tax of N851 million, with PBT margin of 9%.
• Profit After Tax of N614 million, with PAT margin of 7%.
• Increased working capital deliberately to ensure sufficient raw material availability to continue production, hence inventory increased by N2.8 billion from Dec 2020.
• Trade and other receivables increased by N366 million in line with higher revenue.
• Strong cash position of N3.3 billion, with the key movement from Dec 2020 being the N1.5 billion paid to shareholders as dividends.

Commenting on the performance, Managing Director, David Wright, stated: “The merger between Chemical and Allied Products Plc (CAP) and Portland Paints and Products Nigeria Plc (Portland Paints) was successfully completed on the 1st of July 2021 with CAP being the surviving entity.

The financial results for the third quarter of 2021 reflects the combined entity. Despite the challenging environment, we continue to generate higher sales across our product portfolio.

Revenue improvement has been driven by (i) strong volume growth, (ii) price increases and (iii) new products in our portfolio, following the merger.

Raw material cost escalation remains a key concern and we will continue to carefully assess pricing. In addition to pricing, we will focus on production and operating efficiencies in order to protect margin”.