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Julius Berger Nigeria’s profit dips 70% on lull in construction sector

By on April 2, 2016

The lull in the construction sector of the Nigerian economy has impacted negatively on the operations of Julius Berger Nigeria (JBN) Plc,  leading to a dip of 70 per cent in profit after tax(PAT) for the year ended December 31, 2015.  JBN is a leading construction company offering integrated construction solutions and related services. The company handles significant percentage of   federal and state governments’ construction works.

However, given the fall in the revenue of government caused by the decline price of crude oil, most major construction works, including roads and houses, have been put on hold since the second half of last year.

And the audited results of JBN appear to be reflecting the negative impact of  that as its revenue and profit declined. Revenue for 2015 stood at N133.807 billion, showing a decrease of 32 per cent from the N196.808 billion in 2014.  A breakdown of the revenue showed that earnings from Civil works fell by 30 per cent from N1019.3 billion in 2014 to N75.8 billion, while revenue from Building works and Services declined by 33 per cent from N70.38 billion to N46.64 billion and from N17.088 billion to N11.32 billion respectively. Gross profit fell from N50.495 billion to N33.334 billion.

However, JBN strived to reduce cost of operations. For instance, marketing expenses was reduced from N116.8 million to N75 million, while administrative expenses declined from N31.497 billion to N21.445 billion. Financial cost rose from N5.9 billion to N6.148 billion.

Consequently, the company ended  the year with a profit before tax of N6.499 billion, down by 50 per cent from N13.134 billion in 2014. PAT recorded a higher decline of 70 per cent to N2.440 billion, from N8.23 billion.

Since its pioneer project in 1965, Julius Berger Nigeria Plc has played a pivotal role
in the development of Nigeria. The company specialises in executing complex works requiring the highest level of technical expertise and Nigeria-specific knowhow.

The construction giant  had similarly witnessed a drop in revenue in 2014. Addressing shareholders  of the company in Abuja during the 45th annual general meeting, the Chairman of JBN, Air Vice Marshall Nurudeen Imam (rtd)  blamed the dip in revenue on several factors, including the Ebola virus outbreak in West Africa and fall in price of crude oil.

“The economy was hit by various factors simultaneously, the unfortunate, but well managed influx of the Ebola virus, the falling crude oil price on international markets and the adjustment of the naira are but a few. Such serious adversely influenced the business climate, as well as financial budgets and subsequent funding nationwide, and result in an overall downward trend which picked up momentum by the third quarter of the year,” Imam said.

 

[ThisDay]