Julius Berger PLC, Nigeria’s largest construction company declared a net profit of NGN 251 million for the first quarter of this year.
With this result, it means the company’s gross profit fell by 42% as its gross revenue fell from NGN 48 billion in Q1 2015 to 28 billion last quarter.
To really paint how things went bad for the company, its net income came down to NGN 251 million compared to NGN 2.4 billion in its audited account for the year. This is a whopping NGN 460%.
There are more worrying signs for Julius Berger. The construction giant is in debt to the tune of NGN NGN 93 billion. As if this is not enough, the company’s net cash deposit fell from NGN 28 billion in Q1 2015 to NGN 27 billion. Its net asset is about 149 billion. While the company should be able to weather the storm, the company has to keep a leash on its debts.
The 4th Mainland Miracle?
Nigeria’s economy has been stressed since the global crude market went on a free fall. Julius Berger is a major contractor to federal and state governments. The company will have to be very choosy on what projects it will take on to reduce its exposure to leverage.
Many state governments would have to owe the company for a long time if Julius Berger would bid to take on their projects.
However, the Lagos state government might give the company something to smile about. The proposed 4th Mainland Bridge, which might be the biggest construction project in Nigeria for the next decade might be awarded to the company.
If this pans out in its favour Julius Berger might be securing its profitability for a longer period.