United Capital Plc has been whipsawed by the non-recurrence of foreign exchange revaluation gains as rising costs and weak revenue continues to undermine margins.
For the year ended December 2017, United Capital’s pre-tax profit slumped by 12.89 percent to N5.54 billion as against N6.36 billion the previous year.
Profit after tax also nosedived as it dipped by 27.33 percent to N4.63 billion in December 2017 from N6.0 billion the previous year.
The investment house attributed the drop at the bottom line (profit) to non-occurrence of foreign exchange revaluation gains of N1.30 billion in 2016.
In 2016, the Group recognized one off foreign exchange gains of N1.30 billion following the devaluation of the Naira.
Analysts say the investment house ought to have intensified its products to help grow revenue by a double digit as FX gains are one off events and exceptional items that are not expected to recur in the life of a firm.
United Capital has not able to translate each Naira of revenue into higher profit as net margins fell to 48.89 percent in December 2017 from 66.70 percent as at December 2016.
The company’s total revenue dipped by 1 percent to N8.91 billion in December 2017 as against N9 billion the previous year.
However, net operating income increased by a mere 4.91 percent to N7.0 billion in December 2017 as against N6.67 billion the previous year.
The rise in Group operating profit was driven by efficient execution of key mandates in investment in investment banking, trusteeship and security brokerage and by introducing innovative products such as Nigerian Euro Bond Fund and the wealth for Women Fund……, according to the company.
United Capital’s share prices have declined 3.68 percent since the start of the year, underperforming the 8.44 percent NSE ASI.
BALA AUGIE
