TUE, MARCH 26 2019-theG&BJournal- Julius Berger Nigeria Plc, the country’s largest construction company by market value, recorded the fastest profit expansion in 3 years as the economy recovers from 2016 contraction and the foreign exchange market stabilizes.
The Abuja based company, which derives two-thirds of its earnings from government contracts, recorded a 37.15 percent jump in revenue to N191.61 billion in December 2018 from N141.49 billion as at December 2017.
From 2014 to 2017, revenues had been declining due the drop in crude oil price that resulted in a severe dollar scarcity that saw the country tip into its first recession in 25 years while the construction giant posted a loss of N3.81 billion in 2016.
However, the country exited the recession in the fourth quarter of 2017, thanks to a rebound in crude oil price and the introduction of a foreign exchange policy by the central bank that eased the flow of dollars in the foreign exchange.
Julius Berger’s net income surged by 143.02 percent to N6.10 billion as at December 2018, spurred by contracts in the past valued at N500 billion ($1.40 billion).
Net margin, a measure of profitability and efficiency increased to 3.13 percent in the period under review from 1.70 percent the previous year, which means the company is using each Naira invested in sales in generating higher profit.
Foreign exchange acquisition stood at N5.32 billion as at December 2018, this compares with N14.23 billion incurred in 2016.
Projects undertaken by the company include building access roads in Abuja’s central business district, roads and civil works at Dangote Group’s oil refinery now under construction in Lagos and a new bridge on the River Niger near the South Eastern city of Onitsha.
The company is in talks with the government, its main debtor, and is putting pressure on clients behind on payments as part of an effort to recover outstanding payment of about N60 billion.
Julius Berger has spent N5.54 billion on the acquisition of property plant and equipment, this compares with N580.15 million expended on capital expenditure in 2017.
A speedy passage of the budget and further expansion in economic activities in after the election will help add impetus to construction activities, which means there are room for Julius Berger and its peers to grow earnings and maximize shareholders’ wealth.
The federal government proposes to spend a total of N8.83 trillion; a figure lower than the current fiscal year’s budget by N300 billion.
The recurrent component of the proposed budget is projected to be about N6.18tn trillion while N2.03 trillion has been earmarked for capital expenditure and projects.
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