The Many Problems Of RT Briscoe


KPMG, auditors to RT Briscoe Plc highlighted, in a recent report, their worries about the going-concern status of the company. In plain English, if there are no immediate improvements in the company’s fortunes, it may have to fold shop.

This company may not be significant in the larger scheme of things but its current travails is symptomatic of what most small businesses in Nigeria face today.

The company in 2015, made a loss of N4.2 Billion. 2016 results for the company are equally negative, with a loss of N1.73 Billion for the year ended September 2016. The more critical aspect is the huge negative retained earnings of N5.6 Billion as at September 2016. Put simply, the company is surviving on the benevolence of banks.

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The journey to this sorry state did not begin overnight. The company made the mistake of investing in only cyclical sectors of the economy, and having no competitive moat. While it started as one of the major dealers in Toyota products, luck soon ran out as other companies gradually began to sell Toyota cars too. Ford Motor Company ended its 11-year partnership with Briscoe, saying it did not make commercial sense to have two dealers operating in the same country. Coscharis Motors thus became the sole distributor of Ford vehicles in the country, leaving RT Briscoe stuck with unsold cars and spare parts.

The market for brand new vehicles is a thin one in Nigeria. The massive devaluation of the Naira last year, meant that the prices for new vehicles have doubled. During economic crisis, new vehicle sales tend to dip massively.

The company also ventured into real estate, which is another cyclical sector. The bleak economy, has led too many individuals and companies either downsizing to smaller spaces, or renegotiating for lower rates. Some have also moved to areas with cheaper rates. Real estate operators are thus left with high vacancy rates.

Briscoe is also into the sales and leasing of industrial equipment.  Again, the current downturn in the economy has forced many industries and construction companies to become idle.

The only way out for RT Briscoe is to urgently raise more capital, and more importantly, to change strategy by focusing on more profitable non-cyclical ventures.



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