Company Analysis

Transcorp doubles profit at full year


Transnational Corporation of Nigeria (Transcorp) has closed the 2018 financial year with 100% profit advance, as projected. The conglomerate netted N20.6 billion for the year, which is almost at par with all the profits it posted in the preceding four years put together. This is a strong profit growth sustained for the second year.
The breakthrough performance pivoted on the company’s energy business, which has become the largest revenue provider, accounting for over 83% of turnover in 2018. The energy segment led revenue growth in the year with an increase of 30.6%.
Transcorp Power Ltd, the group’s power sector subsidiary, has achieved a significant increase in gas supply to its plants and consequently power generation and transmission to the national grid. Its power generating capacity is estimated to have exceeded 800 megawatts at the end of 2018.
A healthy growth in revenue has been the company’s strength for the elevated performance since 2017. The coming on stream of the energy business multiplied group revenue more than five times in 2017. The upturn in turnover was sustained in 2018 with an increase of 29.7% to N104.2 billion. This is just slightly below the projected revenue figure of N107 billion for Transcorp for the year.
Costs maintained generally moderated increases against the strong growth in revenue during the year, which enabled management to extend margins. Cost of sales moderated relative to turnover at the end of the year and this permitted a healthy growth of over 32% in gross profit to N48 billion. Gross profit margin improved from 45.4% in 2017 to 46.3% in 2018.
At an increase of 24%, administrative expenses also remained moderated relative to revenue. Despite a decline in other income, the group still achieved an increase of 33% in operating profit to N34.6 billion at the end of the year.
Moderated cost behaviour continued in respect of finance expenses, which declined marginally to about N9.6 billion. A foreign exchange loss in financing activities also dropped by over 30% to N3.2 billion during the year. Net finance cost therefore dropped by 11% to a little over N12 over the review period.
The company’s balance sheet borrowings were only marginally reduced at over N111 billion at the end of 2018.
Transcorp’s profit capacity was reinforced further in 2018 from the significantly enhanced position in 2017. This reflects strong growth in revenue and a general moderation in costs.
Profit margin improved from 13.2% in 2017 to 19.8% at the end of 2018. Growing revenue and the improved ability to convert same into profit were the key operating strengths underlying the strong profit growth that Transcorp achieved in 2018.
The corporation closed the year’s operations with an after tax profit of N20.63 billion, doubling the preceding year’s net profit figure of N10.6 billion. It is a breakthrough performance for the company, almost matching all the profits earned in the preceding four years. It is another galloping speed growth after lifting after tax profit a clear 130% in 2017.
The company earned 23 kobo per share at the end of the 2018 financial year compared to 12 kobo per share in 2017. The board has proposed a cash dividend of 3 kobo per share, up from 2 kobo per share paid for the 2017 operations. Qualification date was 28th February and payment date is 19th March 2019.
Transcorp group operates through subsidiaries in four economic sectors – hospitality, electric power generation, oil and gas and agriculture. Two oil and gas subsidiaries are in the start-up phase for exploration, refining and marketing of petroleum products and are expected to boost group revenue further.

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *