9M-2020: CAP Plc reports N928m profit as revenue soars 34% in Q3

• Maintains strong cash position of ₦4.97bn
• Envisages improved performance
• New growth strategy lifting operations, says MD

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Chemical and Allied Products Plc (CAP), one of Nigeria’s leading paints and decorative companies, has posted positive numbers in its unaudited results for the nine months ended 30 September 2020.

The improved performance of the company defied the odds of the Corornavirus pandemic (COVID-19) and other economic headwinds within the period on the back of a new growth strategy of the company embarked on in 2019.

According to the latest financial report, the  company’s revenue grew by 3.7 per cent Year on Year (YoY) to ₦6.0 billion in the first nine months of 2020, on account of strong volume growth of 10.8n per cent YoY despite the COVID-19 related disruptions in April and May.

The nine month 2020 revenue improvement was driven by a strong Q3 performance, as the revenue soared significantly by 33.7 per cent Q-o-Q between July and September.

Despite input cost escalation from supply chain disruptions, inflation and currency devaluation within the period, CAP Plc posted gross profit of N2.7 billion, reflecting marginal decline of 2.1 per cent.

As the company reported Earnings Before Interest and Taxes (EBIT) of N1.2 billion, the EBIT margins whilst strong at 19.5 per cent to show a decline of 610 basis points YoY due to the impact of gross profit compression mentioned above, and budgeted staff cost increases driven by deliberate initiatives to strengthen the work force.

According to the report made available shareholders and the investing public through the Nigerian Stock Exchange (NSE), Profit Before Tax  (PBT) of CAP Plc for the nine-month period stood at ₦1.4 billion.

This represents 850 basis points decline on Profit Before Tax margin due to the decline in operating profit; and a 40.6 per cent decline in net finance income due to lower investment income yields compared to prior year.

Meanwhile, the company reported a sum of N928 million as the total profit for the period despite 24.4 per cent decline from ₦1.2 billion reported in the comparative nine-month period of 2019. Similarly, earnings per share for the period was 133 kobo, down by 24 per cent from 175 kobo in 9M- 2019.

Operating Cash Flow for the period was ₦285 million in 9M 2020, compared with ₦424million in 9M 2019. Up till September, the company continued to maintain a strong cash position of ₦4.97 billion with a 15 per cent growth in cash and cash equivalents between Dec 2019 and Sep 2020 which provides a buffer for operational requirements.

David Wright, CAP Plc MD

Commenting on the performance, David Wright, managing director, CAP Plc recalled that in the last quarter of 2019, CAP embarked on a new growth strategy focused on creating value for its shareholders, adding: “we are encouraged by the top line growth thus far.

“CAP’s performance in 2020 has been affected by COVID-19, particularly in April and May as a result of the stringent movement restrictions which constrained production and led to supply chain disruptions.

“Despite the challenging operating environment, we achieved strong revenue and volume growth of 34 per cent and 34.6 per cent respectively in the third quarter of the year.

“Going forward, we expect to continue to see the positive effects of our growth strategy on our sales and remain focused on managing operating costs to deliver on profit ambitions in the fourth quarter,” he said.

Key Financial Highlights