The interim financial report of the cement producing company for the half-year ended June 2023, shows that some rising costs that broke the profit speed in Q1 were out of the way in Q2.
The summary of the company’s earnings story in Q2 is that management changed the cost-income pattern: cost savings took the place of all-round cost increases in Q1 and sales advanced more than two and half times over the Q1 growth rate.Sales revenue grew by 25.3 percent in Q2 to N114.7 billion against the increase of 9.7 percent to N106.4 billion in Q1. This was reinforced by a windfall from other income — mainly insurance claims that multiplied more than 66 times to N937.
The resulting cost saving stretched out gross profit margin, which enabled an increase of 30 percent in gross profit to N55.7 billion in Q2. This is a big leap from the moderate increase of 4.5 percent in gross profit to N50.4 billion in Q1.Leading the cost saving drive of the company in Q2 is administrative cost — which changed course from an increase of 72.9 percent to about N4.8 billion in Q1 to a sharp drop by one-half to less than N1.4 billion in Q2.
Though selling/distribution cost has slowed down drastically from a marked increase of 124 percent to N7.3 billion in Q1, it is yet growing well ahead of sales at 40.5 percent to N6.8 billion in Q2.The significantly improved cost-income balance in Q2 powered a big turnaround in operating results. Operating profit has rebounded from a drop of 9.4 percent to N38.4 billion in Q1 to a leap of 37.3 percent to N48.6 billion in Q2.
Gross profit grew by 16.5 percent to N106.1 billion, which was supported by a massive increase in other income from N200 million to N983.3 million over the review period.Administrative expenses moderated at an increase of 12.3 percent to N6.1 billion, but selling and distribution cost rose by 74.1 percent to N14 billion — more than four times the increase in sales revenue.