By Peter Egwuatu
The coronavirus, COVID-19 pandemic has affected the performance of Chemical and Allied Products Plc (CAP) , in the first quarter of 2021, Q1’21, though its operating expenses, OPEX improved by 258 bases points, bps or 23.3 per cent from 25.8 per cent in Q1’20.
A review of the Company’s unaudited results released to the Nigerian Exchange Group, NXG for the first quarter ended March 31, 2021 showed that revenue of N2.1 billion was lower than Q1’20 by 9.5 per cent. The gross profit was N703 million, a decline by 39.9 per cent as against N1.167 billion in Q1’20 with gross margin of 33.5 per cent. Operating expenses better managed with opex/ sales of 23.3 per cent, an improvement of 252 basis points from 25.8 per cent in Q1’20.
Other performance indicators showed that the Company recorded Earnings Before Interest and Tax, EBIT of N236 million, with EBIT margin of 11.3 per cent while Profit Before Tax, PBT stood at N299 million from N672 million in Q1’20, with PBT margin of 14.3 per cent.
Profit After Tax, PAT stood at N203 million, as against N 457 million in Q1’20 with PAT margin of 9.7 per cent. It recorded cash of N5.7 billion, of which N1.4 billion is expected to be distributed as dividends to shareholders in June 2021.
Commenting on the performance of CAP, Managing Director, David Wright, stated: “In the first quarter of 2021, we saw the biggest impact of the COVID-19 pandemic on our business. Increased global demand for chemicals driven by the economic rebound in Asia and feedstock challenges, with several suppliers declaring Force Majeures, resulted in a global shortage of raw materials.
This significantly impacted product availability in the first quarter of the year. In addition, there was a scarcity premium placed on all available raw materials which eroded gross margin across various product lines. We have taken steps to secure alternative raw material sources and are increasing inventory levels to mitigate against further disruptions. As such, we expect a strong recovery in the remaining quarters of the year.
“Our focus remains on creating shareholder value and we will continue to pursue attractive growth opportunities to achieve this.”