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Transcorp: Maintaining high growth in revenue and profit

Transcorp: Maintaining high growth in revenue and profit
December 15
11:06 2014
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Transnational Corporation of Nigeria is steering its transformation process kicked off with the acquisition of a strategic stake by Heirs Holdings. This has actualized new investments in power, oil and gas, agriculture and hospitality, launching the conglomerate into a new phase of high growth. Last year, the company grew profit by over 175% to N6.96 billion. This year, another outstanding growth in profit is expected.

Impressive growth is being recorded by the company at the top and bottom lines, a typical of a growth company with a great future. The recent revenue diversification effort and injection of new money by shareholders are beginning to pay off in terms of considerable expansion in the company’s earnings capacity. The company had exceeded both the full year revenue and profit figures of last year by the end of the third quarter.

Last year, the company’s management broke free from four years of revenue stagnation and achieved the first significant growth in sales volume since 2009. Mr. Emmanuel Nnorom, the new president of the company, has just taken over a company recharged for high growth. He looks confident to report the highest revenue growth in the company’s operating history this year and post the biggest profit ever at the end of 2014.

At the end of the third quarter in September, sales revenue advanced by 166.6% above the corresponding figure last year to stand at N31.40 billion. The full year outlook indicates a turnover in the region of N43.7 billion for Transcorp at the end of 2014. That will be an outstanding growth of more than 132% from the N18.82 billion sales revenue recorded in 2013. It will be a major acceleration from the growth of 42.1% in turnover last year.

Third quarter operations ended with an after tax profit of N8.26 billion, already well above the N6.96 billion full year profit figure realised in 2013. It is an upsurge of 130.7% from the corresponding figure last year. Full year after tax profit is projected at N11.4 billion for Transcorp in 2014, a likely growth of 63.8% after the 175.1% jump in 2013. Profit performance picked up last year after a two-year decline and closed at a five-year peak.

The company could not defend its profit margin during the review period due to rising costs. Major cost increases include cost of sales, which rose well ahead of sales revenue at almost 300% year-on-year as at the end of the third quarter. That has lowered gross profit margin from 78.1% to 67.2% during the period. The other cost increases are net finance cost, which tripled at N2.65 billion and other operating expenses of N1.08 billion, which was completely absent last year.

Some revenue disappointments also contributed to the loss of profit margin during the period. These include a drop 82.4% in other operating income and a fall of 30.8% in finance income. Net profit margin declined from 30.4% in the third quarter of last year to 26.3% at the end of September.

The company earned 13 kobo per share at the end of the third quarter, rising from less than 6 kobo per share in the corresponding quarter of last year. Earnings per share is projected at 18 kobo for Transcorp at the end of 2014 against 10 kobo reported in 2013. The company paid a dividend of 5 kobo per share to shareholders for its last year’s operations.

Transcorp Plc: 3rd Quarter Earnings Report

Sept 2014Year-on-Year Growth -%Full Year Projection Nb
Turnover – Nb31.40166.643.7
Asset Turnover0.20
After Tax Profit – Nb8.26130.711.4
Net Profit Margin  – %26.326.1%
Earnings per Share – K13122.818
Dividend- K [2013]5 Ex Div
NSE Closing Price 12/12/14 – N3.05
Share Price Year-to-Date – %-29.9

 

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