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Huge tax burden hurts May & Baker’s bottom-line

By Peter Egwuatu
MAY & Baker Nigeria Plc recorded growth in its operating profit for the financial year 2016 as it surged by 25.2 per cent to N820.87 million from N655.80 million in 2015.

The Profit Before Tax, PBT, equally jumped by 142.9 per cent to N345.9 million in 2016 from N142.4 million in 2015.

Highlights of the audited report and accounts of the company for the year ended December 31, 2016 submitted to the Nigerian Stock Exchange (NSE) showed that in spite of the tough operating environment in 2016, it recorded steady growths across key fundamentals, except Profit After Tax (PAT) which was eroded by a 420.5 per cent hike in taxation.

The report showed that while sales rose by 12 per cent, significantly improved operating efficiency resulted in the average profit-making capacity of the group on every unit of sale with pre-tax profit margin doubling to 4.1 per cent from 1.9 per cent in 2015. Operating profit margin improved to 9.7 per cent from 8.7 per cent in 2015.

Group turnover rose by 12 per cent to N8.5 billion in 2016 as against N7.6 billion in 2015 while gross profit increased marginally from N2.5 billion in 2015 to N2.5 billion in 2016.

While distribution and marketing expenses dropped to N1.14 billion from N1.28 billion, administrative expenses increased to N624.06 million from N587.3 million. However, the surge in taxation to N387.03 million in 2016 from N74.36 million in 2015 displaced the net profit of N68.03 million recorded in 2015 with net loss of N41.1 million in 2016.

The huge tax expense resulted from a cumulative of back duty tax of N128 million, deferred tax charge of N208 million and current tax of N51 million.

Despite this negative bottom-line the board of directors recommended distribution of N58.8 million as cash dividend for the 2016 business year.

Tough macroeconomic environment

Shareholders will receive a dividend per share of 6.0 kobo, if approved by shareholders at the forthcoming Annual General Meeting (AGM).

Managing Director, May & Baker Nigeria Plc, Mr. Nnamdi Okafor, said the group has continued to demonstrate resilience notwithstanding the tough macroeconomic environment that had constrained access to raw and production materials as well as poor   purchasing power of consumers.

According to him, in spite of the macroeconomic challenges, the company’s sales growth has been above industry average while the management has maintained efficient cost control to mitigate the effect of the macroeconomic headwinds on the bottom-line. He said this  performance is driven by innovation, creativity and prudence.

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