Caverton Support Offshore Group plc (COSG), a Nigerian firm that operates in the maritime, aviation and logistics sector, has had its full year profit dented by rising costs, analysis of the financials shows.
For the year ended December 2014, the company’s after tax profit fell by 48 percent to N979.30 million from N1.87 billion the same period of the corresponding year (FY) 2013, while revenue increased by 33 percent to N24.50 billion.
Profit before tax (PBT) also reduced by 14 percent to N2.73 billion compared with N3.15 billion as of FY 2013.
The company suffered the hit at the bottomline due to mounting costs as firms in Africa largest economy Nigeria continue to grapple with huge energy costs resulting from copious amount spent on diesel oil as power from the national grid is unreliable.
The spiralling cost may also have arisen due to capital expenditure incurred by the company as it seeks aggressive expansion drive into sub-Saharan Africa with a view to maximising shareholders wealth.
The dent at the bottomline highlights the need for management to carry out an effective cost control mechanism that will reduce cost and improve profits.
Caverton’s direct operating expenses increased by 25 percent to N13.96 billion in 2014 compared with N11.20 billion as of December 2013.
However, cost of sales ratio fell to 56.06 percent in 2014 as against 60.02 percent in 2013, which means the company spent N0.56 to generate every N1 of sales.
Indirect operating and administrative expenses were up by 27 percent to N7.21 billion in FY 2014 compared with N5.70 billion as of December 2013. Operating expenses ratio reduced to 28.90 percent in 2014 from 30.54 percent in 2013.
Net margin, a measure of profitability and efficiency, fell to 3.93 percent in the review period from 10 percent in 2013.
Earnings per share (EPS) dipped by 47.27 percent to 29k in FY 2014 from 55k as of December 2013.
Total assets were down by 7 percent to N36.62 billion in the review period as against N39.31 billion as of December 2013.
Return on equity fell to 8.21 percent in 2014 from 16.43 percent while the return on assets reduced to 2.67 percent in 2014 compared with 16.43 percent in 2013. Caverton’s share price closed at N3 on the floor of the exchange, while market capitalisation was N10.05 billion.
BALA AUGIE
