Half-year profit of Transnational Corporation of Nigeria Plc (Transcorp) nosedived in the first six months of 2019 after sustaining positive growth trajectory in two years. This was driven by big decline in receipts from capacity charge and energy sent out, the company’s two pillars of revenue.
The group’s revenue plunged 30 percent in half year 2019 to N37.7 billion compared to N54.1 billion posted a year earlier, leading to a double-digit decline of 54 percent in after-tax profit.
Six out of eight revenue segments of the firm trended northwards, while receipts from capacity charge and energy sent out, which accounted for a joint 73 percent in top-line, tanked 36 percent and 40 percent respectively.
Meanwhile, the rout on the Nigerian Stock Exchange (NSE) has pushed a number of stocks to fresh lows and the conglomerate is no exception, as its stock is trading at its lowest price since May 2017.
Year-long the stock is down some 23 percent, translating to a monetary loss of N12.6 billion out of N1.9 trillion lost on the Nigerian exchange since the start of the year.
Despite cost of sales or direct cost of production declined 31 percent in the review period, cost margin ticked up 100 basis points to 54 percent, fuelled by the steep decline in revenue.
Consequently, operating profit was down by 35 percent to N11.1 billion despite a 15 percent reduction in administrative expenses, which pushed margin lower to 29 percent.
This implies for every thousand naira generated as revenue, Transcorp was able to retain N290 in the review year compared to N310 in the preceding comparable period.
While Transcorp paid N7.4 billion as interest on borrowings in first half of 2019, which is 47 percent more than N5 billion expended for similar purpose a year before, interest earned on cash with bank nearly doubled to N922 million.
This brings net finance cost to N6.5 billion in the review period. Meanwhile, the group lost N342 million to foreign exchange on borrowings. The group’s short-term and long-term obligations as at 30th June 2019 stood at N31 billion and N101 billion respectively.
Total assets of the conglomerate appreciated some 6 percent or N17 billion to N307 billion in half-year 2019, an uptick from N290 billion twelve months back. Shareholders’ funds expanded N3 billion higher in the review period.
The group has N28 billion worth of investment in subsidiaries with Transcorp Hotels Plc (N20bn) and Transcorp Power Limited (N8bn), accounting for combined 99 percent of total investment.
Transcorp Plc operates as a diversified investment company. It invests in companies focused in the energy, agribusiness and power sectors. It maintains controlling interests in all its 14 subsidiaries.
