28 January 2021 – Chemical and Allied Products Plc (CAP), one of Nigeria’s leading paints ana decorative companies, announces its unaudited results for the fourth quarter and twelve months ended 31 December 2020.
Commenting on the performance, Managing Director, David Wright, stated:
“CAP recorded modest top-line growth last year despite the COVID-19 lockdown in the second quarter of 2020 and protests in the fourth quarter of 2020, effectively losing 7 weeks of sales. We are encouraged by the growth in revenue which has been solely driven by underlying volume growth in line with our strategy.
Alongside the rest of the world, we experienced supply chain disruptions which impacted our raw material sourcing and resulted in input costs pressures. We have embarked on initiatives focused on mitigating these disruptions and expect to see positive results in 2021.
We announced the proposed merger between CAP and Portland Paints and Products Nigeria Plc in the fourth quarter of 2020. We have received preliminary regulatory approvals and an order from the Federal High Court to hold a Court-Ordered Meeting. Merger completion is subject to shareholder approval and final regulatory approvals and we expect to conclude the merger in the first quarter of 2021.”
Financial Review: Q4 2020
- Revenue increased 4.4P to a2.8 billion in Q4 2020, supporter by strong volume growth (30.4P) across key product lines.
- Gross profit of a1.1 billion was achieved in Q4 2020 from a1.2 billion in Q4 2019, reflecting a 13.2% decline. The decline in gross profit was due to higher input costs on account of supply chain disruptions resulting in a scarcity premium on raw materials which were in short supply.
- EBIT was a475 million compared to a640 million in Q4 2019 on account of the higher cost of sales. Operating expenses only increased by 0.3% YoY while operating expenses/ sales improved 90 bps.
- Profit Before Tax of &532 million was achieved in Q4 2020, a 28.1% decline from &739 million on account of the combined effects of the decline in operating profit mentioned above and a 42.6P reduction in net finance income given lower treasury yields compared to the prior year.
Financial Review: FY 2020
- Revenue increased 3.9% from a8.4 billion in FY 2019 to a8.7 billion in FY 2020, driven by strong volume growth despite the disruptions in April, May and October.
- Gross profit declined 5.5% to a3.8 billion, with a gross margin of 43.0P. Gross profit declined due to input cost pressures on account of currency revaluation and supply chain disruptions.
- EBIT of a1.6 billion, reflecting a decline of 22.4%, with EBIT margin reducing 638 basis points from 25.2% to 18.9%. Key drivers of the reduction in EBIT are the decline in gross profit ana investments in talent to strengthen the workforce and drive profitable growth.
- The decline in EBIT, coupled with a 41. 1 P recline in net finance income on account of lower investment income yields resulted in a Profit Before Tax decline of 25.5P to a1.9 billion in FY 2020. Profit Before Tax Margin declined 860 basis points to 21.7P.
- Total profit for the year was a1.3 billion, a 26.0P decline from a1.7 billion reported in FY 2019. Earnings per share for the period of 182 kobo, down 26.1P from 249 kobo in FY 2019.
- Free Cosh Flow of a1.0 billion in FY 2020, compared to a1.5 billion in FY 2019. Free cash flow impacted by lower operating cash flows which were offset by a reduction in net capital expenditure (-58.4% decline to a113 million in FY 2020). The company continues to maintain a strong cash position (a5.8 billion) which will be deployed towards growth initiatives.
Key Financial Highlights
Chemical and Allied Products Plc (CAP) is a leading paints and coatings company in Nigeria with globally recognised brands such as Dulux and Caplux. CAP manufactures and sells premium and standard paints ana coatings and is the sole technological licensee of Akzo Nobel Coatings International B.V. in Nigeria.
CAP pioneered the colour centre concept in Nigeria in 2005, which resulted in the evolution of the Nigerian paint industry. Today, CAP has Z6 colour centres and colour shops across 31 states. CAP is a public company listed on The Nigerian Stock Exchange. It is a subsidiary of UAC of Nigeria PLC which holds 51.49% of the company’s shares.
