Background
Nigerian Enamelware Plc is engaged in the manufacturing and marketing of enamelware, plastic products, and galvanized buckets.
Raw materials consisting of steel coils, chemicals, enamel and moulds are obtained from both local and overseas suppliers.
The holding company is Feng Limited incorporated in the Hong Kong and holds 60 percent of the company’s equity.
The company has 63.36 million shares outstanding, with shareholder funds standing at N1.23 billion as at the end of January 31 2014.
Financial Performance For The Period Ended January 2014.
Enamelware Nigeria Plc for the nine months period ended 31st January 2014 grew revenue by 2.91 percent to N1.89 billion compared to N1.83 billion recorded in the corresponding period of 2013.
In the nine months period to January 31, 2014, the company recorded an increase in gross profit by 3.7 percent to N282.44 million from N272.32 percent recorded Jan 2013, while gross margins remained flat at 14.9 percent.
The constrain in bottom line growth could have arisen from raw material price pressures and high import duty on steel coils, chemicals, enamel and moulds which is reflecting on its cost of production as cost to sales margin remained high and flattish at 85.1 percent.
The administrative expenses in the review period reduced by 0.64 percent which is marginal to N115.11 Million as against N112.22 million recoded erstwhile period of 2013; however, expenses margin reduced to 5.89 percent in nine month period to January 31 2014 from 6 percent in the previous period.
Operating profit for the nine months period through January 2014 increased by 6.80 percent in the current period to N171 million from N160.10 million recorded in the erstwhile period of 2013.
Although 47.8 percent of operating profits were used to pay interest on loans in the period under review, profit before tax (PBT) jumped by 15 percent to N89.14 million from N77.50 million recorded corresponding period of 2013.
Earnings per share (EPS) for the nine month period through January 2014 grew by 6 percent to 88k from 83k in the erstwhile period of 2013.
The company should try as much as possible to reduce cost with effective control mechanism as net profit margin climbed to 9.03 percent in the review period as against 8.7 percent nine through January 2014.
Enamelware’s shareholders return on asset (ROA) in the nine months period through January 2013 dropped to 2.37 percent from 2.40 percent, while return on equity (ROE) which shows how well the company has used the resources of the owners rose to 4.50 percent Q3:14 from 4.40 percent in the corresponding period.
The company’s current ratio which measures its ability to meet short term obligations as at when due were down to 1.52x from 1.54x recorded in the corresponding period of 2014, while sales turnover slid to1.52x Q3’14 from 1.54x same period.
Enamelware through expansion and acquisition of assets increased total assets by 6.6 percent to N2.35 billion in the period under review from N2.20 billion in the corresponding period of 2013.
Share Performance and Outlook
Enamelware’s share price on the 11st of March 2014 closed at N32 on the floor of the Nigeria Stock Exchange (NSE).
The company’s capitalization on the same day stood at N2.04 billion.
The future is bright for the company as the country’s Gross Domestic Product (GDP) increased to 7.7 percent in Q4’2014 from 6.8 percent in Q3 2013 according to a report released by the Nigeria Bureau of Statistics (NBS). Positive longer term growth prospects, for Nigeria leaves enamelware well positioned to tap into that growth.
