First Aluminium grows amid environmental challenges

First Aluminium Nigeria plc continues to grow amid environmental challenges buffeting the performance of firms operating in the sector, analysis of the third quarter (Q3) financial statement shows.

For the first nine months through September 2014, the company’s revenue increased by 5 percent to N6.56 billion from N6.24 billion the same period of the corresponding year (Q3) of 2013, while net income surged by 74 percent to N32.54 million.

Nigeria’s roofers have been pressured by what analysts refer to as the peculiarities of the challenging macroeconomic environment, such as huge energy costs fuelled by unreliable power supply from the grid, and unfavourable competition from Asian countries like China.

It should be noted that the influx of cheap and substandard products into the country from Asia is undermining the growth of firms operating in the industry.

An industry analyst, who prefers to remain anonymous, says the delay in clearing materials from the country’s port and high import duties by customs officers also dampen the performance of local manufacturers of aluminium.

He says the industry suffers from double or multiple taxes, especially in the area of withholding tax.

The effects of the above impediments, impacted on First Aluminium as cost of sales margin, which measures the relationship between cost of production and turnover, was as high as 93 percent in the review period, while cost of sales increased by 4 percent to N6.07 billion. Net margin, a measure of profitability and efficiency, was as low as 7.47 percent.

The company had better control of direct costs attributable to projects as gross profit rose by 22.50 percent to N490 million in the review period, compared with N400 million the preceding year.

Nigeria’s government is formulating policies that will bolster the performance of companies operating in the industry.