Background
First Aluminium Nigeria plc was incorporated August 20, 1960, as Alcan Aluminium of Nigeria Limited, a subsidiary of Alcan Aluminium Company of Canada, one of the world’s international aluminium companies.
The name of the company was changed to First Aluminium Company (Nigeria) Limited when it became a subsidiaries of Alucon Holdings SA, a wholly-owned subsidiary within the Inlaks Group, based in Monte Carlo. On May 10, 1991, the company changed its name to First Aluminium Company of Nigeria plc and on November 5, 1992, it became a quoted company in Nigeria.
The company is engaged in the manufacture of aluminium coils, sheets and laminate, aluminium and seamless tubes.
The company has 2.11 billion shares outstanding with shareholders fund of N4.61 billion as of the end of March 2014.
Financial results for Q1 2014
First Aluminium is increasingly tapping into the enormous opportunities embedded in the Nigerian economy as it recorded an impressive first quarter results.
However, there are challenges such as unsteady power supply, huge cost of raw materials, and competition from foreign companies that besets the aluminium industry of the most populous and largest economy in Africa, Nigeria.
Despite the aforementioned impediments, the company, in the first three months of the year, grew revenue by 6 percent to N2.09 billion from N1.977 billion as of Q1 2013.
The company impressively moved to a profit position of N7.19 million in the review period from 15.87 million loss figure recorded in 2013.
Profit after tax followed the same trend as it also moved to a profit position of N4.89 million in Q1 2014, as against a loss of N10.79 million as of Q1 2014.
Analysts are calling on government to formulate policies that will reposition the industry on a globally competitive arena. They went further to state that industry operators would have been doing better but had growth crimped by bottlenecks such as huge material, production, energy and distribution cost.
The industrial bottlenecks mentioned above are impacting on the input costs of First Aluminium, thus lowering margins.
First Aluminium’s cost-to-sales margin was as high as 90.38 percent in the review period. What this means is that for every N1 of turnover generated by the company, 90k goes into production cost.
Gross margin, which measures the relationship between turnover and cost-of-sales increased to 10k in 2014, from 7k as at Q1 2013. Total assets in the review period remained flat at N8.56 billion.
The rapid urbanisation as a result of population explosion surge in the demand for building materials and the new refinancing scheme by the Federal Government of Nigeria means the future is bright for First Aluminium plc.
Nigeria with her current population estimated at over 165 million, growing at a rate of 3.5 percent per annum, has a short fall in the supply of housing units that has been estimated to be between 16 – 17 million.
Furthermore, with an economic growth rate of 5.7 percent per annum in the past five years, Nigeria has witnessed a growth in the number of middle-class families with the associated need to have a home of their own, thereby further deepening the real estate market, and hence roofing needs.
It should be noted that over 60 percent of the entire population of the country lives on rented accommodation. This indicates another embryonic market for First Aluminium to exploit.
The company’s shares closed at 50k on the floor of the Nigerian Stock Exchange, while market capitalisation stood at N1.05 billion.
BALA AUGIE
