CAP profit falls by 29.8% as COVID-19 hammers sales

Chemical and Allied Products Plc, a Nigerian paints and coatings company, has said its total profit for the financial year 2020 dropped by 29.8 percent to N1.2 billion from N1.7 billion reported in FY 2019.

The company said its profit before tax declined by 29.1 percent in 2020 on account of the combined effects of lost sales during lockdown, devaluation, and supply chain disruptions.

It said its revenue increased by 3.9 percent from N8.4 billion in 2019 to N8.7 billion in 2020, driven by strong volume growth despite the disruptions in April, May and October.

Free cash flow remained very strong at N1.2 billion, signifying the continued strong cash generating ability of the company in spite of significant headwinds, according to CAP.

The Managing Director, CAP, David Wright, said, “CAP recorded modest top-line growth last year despite the COVID-19 lockdown in the second quarter of 2020 and protests in the fourth quarter of 2020, effectively losing seven weeks of sales.

“We are encouraged by the growth in revenue which has been solely driven by underlying volume growth in line with our strategy. Alongside the rest of the world, we experienced supply chain disruptions which impacted our raw material sourcing and resulted in input costs pressures.”

He said the company had embarked on initiatives focused on mitigating these disruptions, expecting to see positive results in 2021.

Wright said, “We announced the proposed merger between CAP and Portland Paints and Products Nigeria Plc in the fourth quarter of 2020. We have made significant progress and expect to conclude the merger in the second quarter of 2021, subject to receiving final regulatory approvals.

“I am pleased to announce that the Board approved that a dividend of 210 kobo per ordinary share be recommended for payment to our shareholders. This will be subject to the appropriate withholding tax and the approval of the shareholders at the Annual General Meeting.”