Transcorp’s Net Profit Drops 63.08% Amid Strained Naira Redesign Policy
THE Transnational Corporation of Nigeria Plc, a publicly traded company under the name Transcorp, reported a 63.08 per cent decline in profit after tax (PAT) to N1.86 billion in the first quarter (Q1) of the year, from the N5.04 billion the company posted in the same period of 2022.
Many businesses had been adversely affected by the naira redesign policy of the Central Bank of Nigeria (CBN) in the first quarter.
The apex bank had in October 2022 announced its plan to phase out designs of the N200, N500 and N1,000 notes, and introduced new designs into circulation, arguing it would help check counterfeiting, strengthen the economy, fight banditry, curb vote-buying in the general elections, and reduce the expenditure on cash management.
However, the redesign policy, experts said, had done more damage to the economy, paralysing business activities.
“The entire exercise was a needless disruption of economic growth activities, especially among the most vulnerable segments of the economy,” the Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf, told The ICIR.
A look at Transcorp’s unaudited financial statements for the period ended 31 March 2023 showed that the company reported losses across all its main profit indicators.
A diversified conglomerate with investments in the hospitality, power, and oil and gas sectors, Transcorp’s profit before tax (PBT) also fell sharply by 50.18 per cent to N2.85 billion in the first quarter this year, from N5.73 billion in the first quarter of 2022.
Chaired by Tony Elumelu, a Nigerian philanthropist, the company’s gross profit moderated by 6.61 per cent to N14.22 billion, from N15.23 billion in the review period.
While Transcorp’s revenue grew minimally by 3.20 per cent to N32.39 billion from N31.39 billion, a 12.44 per cent rise in cost of sale to N18.17 billion from N16.16 billion brought its gross profit to fall by 6.61 per cent to N14.22 billion, from N15.23 billion in the review period.
Its operating expenses, also known as selling, general and administrative expenses (SG&A) or indirect cost, brought the company’s operating profit to decline by 15.22 per cent to N8.49 billion in the first quarter this year, compared to N10.02 billion reported in the first quarter of 2022.
Transcorp’s total assets now stand at N351.84 billion in the review quarter, up by 3.23 per cent.
Meanwhile, Femi Otedola, a Nigerian businessman, had last week acquired over a five per cent stake in the company. The move has seen Transcorp’s share price rise by 32.14 per cent to N1.85 as of Monday, 17 April, when compared to the N1.40 figure it was as of Tuesday, 11 April.
Story credit: The International Centre for Investigative Reporting (The ICIR)
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