Chemical and Allied Products Plc (CAP), Nigeria’s leading paints and decorative company, profit before tax declined by 28.1 percent from N739 million filed in the final quarter of 2019 to N532 million in the final quarter of 2020.
Revenue expanded by 4.4 percent to N2.8 billion in the quarter, largely due to 30.4 percent growth in volume recorded across key product lines.
However, CAP posted a 13.2 percent decline in gross profit from N1.1 billion in the fourth quarter of 2020, down from N1.2 billion achieved in 2019.
According to the company, the decline in gross profit was a result of COVID-19 disruptions and high input costs recorded on the supply chain due to scarcity of raw materials.
Earnings before interest and taxes (EBIT) stood at N475 million in Q4 2020, down from N640 million posted in Q4 2019 due to the high cost of sales recorded during the period under review.
As expected, operating cost grew by 0.3 percent year-on-year while operating expenses/sales improved by 90 basis points.
The company’s net finance income declined by 42,6 percent because of the lower treasury yields when compared to the preceding year.
Commenting on the company’s performance, Managing Director, David Wright, said: “CAP recorded modest top-line growth last year despite the COVID-19 lockdown in the second quarter of 2020 and protests in the fourth quarter of 2020, effectively losing 7 weeks of sales.”
“We are encouraged by the growth in revenue which has been solely driven by underlying volume growth in line with our strategy. Alongside the rest of the world, we experienced supply chain disruptions which impacted our raw material sourcing and resulted in input costs pressures. We have embarked on initiatives focused on mitigating these disruptions and expect to see positive results in 2021.”
“We announced the proposed merger between CAP and Portland Paints and Products Nigeria Plc in the fourth quarter of 2020. We have received preliminary regulatory approvals and an order from the Federal High Court to hold a Court-Ordered Meeting. Merger completion is subject to shareholder approval and final regulatory approvals and we expect to conclude the merger in the first quarter of 2021.”
