Arbico, a full-service building and civil engineering construction company quoted on the Nigerian Stock Exchange (NSE), recorded a nosedive in its top-line and bottom-line in the first three months of 2019 making little of its double-digit growth in turnover.
Profit for the period fell by 80.89 per cent to N17.05 million in 2019 as against N89.24 million the construction company recorded in the comparable quarter of 2018 on the heels of rising cost which impacted earnings.
Revenue grew year on year by 17.06 per cent to N1.29 billion in the recently concluded quarter from N1.1 billion the year before but the cost of sales rose by 24.52 per cent in the review period and gross profit fell to N256.65 million, 5.67 per cent lower than 2018 figures.
The implication for Arbico was that it was only able to retain for meeting its N19.90 out of every N100 from revenue, compared to N24.70 per N100 as gross margin declined. A higher margin would have seen Arbico have more naira per sales to service its other costs and debt obligations.
Finance income for the construction company skyrocketed 285.5 per cent to N1.28 million from N331,000 year on year in the three months to March 31, 2019, while Arbico made 97.71 per cent less from sales of its scraps in the first quarter of 2019 compared to the preceding year where it recorded N785,000 turnover.
There was no income from attendance for Arbico in the just concluded although it made N1.08 million twelve months before. On the other hand, the company was able to generate N1.84 million from rent, N51,000 from Exchange gains and had an insurance claim of N234,000 in the 2019 quarter.
A 16.58 per cent surge in operating expenses from N137.93 million in the first quarter of 2018 to N160.8 million in the same period of 2019 coupled with a 56.61 spike in staff cost and employees benefit put pressure on Arbico’s operating profit which declined 80.89 per cent to N17.05 million.
The company didn’t have any tax expense for the period, leaving its profit for the quarter the same as the operating profit.
Consequently, Operating Margin and Net Margin dropped from 8.10 per cent to 1.32 per cent year on year. Operating margin measures how much of the generated sales is left when all operating expenses have been paid deducted while Net Margin how much a company makes as profit from every naira sales.
The performance weighed on the company’s earnings per share which fell to 11 kobo from 60 kobo in the review period.
Arbico delivers projects for government, multinationals, industrial groups, oil and gas majors and high net-worth individuals. Its services include pre-construction, design-build, general contracting and construction management. Arbico was established in 1958 and quoted on the Nigerian Stock Exchange in 1978.
