R.T Briscoe Nigeria Plc is staggering as recurring losses caused by huge interest on loans borrowed from bank means the company needs urgent restructuring.
The last time the company that sells and services motor Toyota vehicles and industrial equipment recorded a profit was in 2014, data gathered by BusinessDay shows.
For the first nine months through September 2016, R.T Briscoe’s net finance costs of N1.54 billion, that wiped out all of gross profit, culminated in a loss after tax of N1.73 billion.
Losses for the same period last year stood at N1.53 billion.
There are negative shareholders fund of N1.77 billion in the books of car distributor, which means it has been carrying forward losses that will be written down/netted against future profit.
There was a court injection in July barring R.T Briscoe from accessing some of its assets over unpaid debts owed to a Nigerian bank.
Justice Ibrahim Buba of a Federal High Court in Lagos has barred R.T. Briscoe Nigeria Plc from accessing its funds in various commercial banks in the country over an alleged bank indebtedness of N2.5 billion.
Firms in Africa’s most populous nations are struggling with spiking interest expenses as debt piled on the back of a sudden devaluation of the currency by the central bank.
The debt levels are eating deep into corporate profit and resulting in a loss position for firms that with a weak sales.
Business Intelligence Market (BMI) analysed the 40 biggest Nigerian companies ex-financials and found out that cumulative finance costs on loans, overdrafts, short and long term borrowings and commercial papers surged to N197.88 billion in the September 2016 period.
This was 170.85 percent of the cumulative net incomes of 40 firms which totalled N115.82 billion in the period under review.
“Companies overtime depend on expensive short-to-medium term loans to finance working capital, expansion and CAPEX projects,” said Abiodun Keripe, Elixir Investment Partners Ltd’s head of research and strategy.
“This clearly has not helped profitability even in the context of shrinking top-line growth.”
For R.T Briscoe, a scheme of capital reduction and reorganisation will help reduce the N5.65 billion negative reserves caused by the recurring loses.
The company’s sales dropped by 13.84 percent to N8.28 billion while gross margins were down 36.0 percent to N1.12 billion in the period under review.
R.T Briscoe’s share price closed at N0.50 on the floor of the Nigerian Stock Exchange (NSE) while market capitalisation was N588.17 million.
BALA AUGIE
