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CAP continues to suffer COVID-19 fallout despite Q2 revenue growth

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New details emerge, as CAP nears acquisition of Portland Paints

COVID-19 is not totally done with Chemical and Allied Products (CAP) as the company continues to lose a chunk of its profit to the pandemic which disrupted global business environment for almost all of 2020.

CAP posted 202 percent growth in revenue this year’s Q2, after generating N3.54 billion, which surpassed the N1.17 billion it grossed in Q2 last year.

Its profit was also on an upward swing, rising by 110 percent. According to the paint maker’s financials, its gross profit was capped at N1.03 billion for Q2 2021, against the N493 million reported for the same period in 2020.

CAP’s operating profit followed the same path as it rose to N350.9 million between April to June (Q2), to settle above the N168.58 million reported during the corresponding period last year.

But the profit margin was held in the jugular by the cost of production and the operating expenses during the three months under review.

It was gathered that the cost of sales significantly increased by 268.1 percent to hit N2.51 billion in Q2 2021, far above the N682.83 million spent on production in Q2 last year [note that operations were partial in Nigeria due to COVID-19].

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Also, the operating expenses reduced the profit margin after rising by 158.5 percent in Q2 2021. CAP financials shows that operating expenses was N879 million for the period under review, topping the N340 million reported for the Q2 2020.

Increase in cost of sales and operating expenses had been influenced by high cost of materials and other services needed for the continuous operation of CAP.

While commenting on the impact of the COVID-19 pandemic on CAP’s earnings, the Managing Director, David Wright, said, “the impact of the COVID-19 pandemic on our business, which resulted in a global shortage of raw materials and significant increase in input costs, continues to affect profitability margins.”

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