First Aluminium reverts to profitability fuelled by surge in housing demand

First Aluminium Nigeria plc, a subsidiary of Alcan Aluminium Company of Canada, is increasingly tapping into the enormous opportunities embedded in the Nigerian economy as it recorded an impressive first quarter results. However, there are challenges such as unsteady power supply, huge cost of raw materials, and competition from foreign companies that besets the aluminium industry of the most populous and largest economy in Africa, Nigeria.

Despite the aforementioned impediments, the company, in the first three months of the year, grew revenue by 6 percent to N2.09 billion from N1.977 billion as of Q1 2013.The company impressively moved to a profit position of N7.19 million in the review period from 15.87 million loss figure recorded in 2013.

Profit after tax followed the same trend as it also moved to a profit position of N4.89 million in Q1 2014, as against a loss of N10.79 million as of Q1 2014.Analysts are calling on government to formulate policies that will reposition the industry on a globally competitive arena. They went further to state that industry operators would have been doing better but had growth crimped by bottlenecks such as huge material, production, energy and distribution cost.The industrial bottlenecks mentioned above are impacting on the input costs of First Aluminium, thus lowering margins.

The rapid urbanisation as a result of population explosion surge in the demand for building materials and the new refinancing scheme by the Federal Government of Nigeria means the future is bright for First Aluminium plc.

Nigeria with her current population estimated at over 165 million, growing at a rate of 3.5 percent per annum, has a short fall in the supply of housing units that has been estimated to be between 16 – 17 million. Furthermore, with an economic growth rate of 5.7 percent per annum in the past five years, Nigeria has witnessed a growth in the number of middle-class families with the associated need to have a home of their own, thereby further deepening the real estate market, and hence roofing needs.

It should be noted that over 60 percent of the entire population of the country lives on rented accommodation. This indicates another embryonic market for First Aluminium to exploit. The company’s shares closed at 50k on the floor of the Nigerian Stock Exchange, while market capitalisation stood at N1.05 billion.