Julius Berger Nigeria Plc has posted record profit on the back of acceleration in construction activities, and the proposed capital expenditure spend by the government means a propitious future outlook.
Construction activities were static during the pandemic that forced the government to impose a lockdown policy that helped tipped the economy in its second recession in 5 years in 2020.
However, there was a remarkable turn of events in the first quarter of 2021 when the relaxation of the social distance rules reinvigorated business activities across the country while workers, foremen, masons, and engineers went back to the sites.
The gradual economic recovery and benign weather is a boon for Julius Berger as net income was up 26.31 percent to N6 billion in June 2022 from N4.75 billion as at June 2021.
Of course, it posted a loss of N1.93 billion in 2020, but the certainty of earnings recovery from a decline in activities brought on by the pandemic crisis is impressive and analysts are betting on the construction giant stocks because the country’s infrastructure deficit is expected to underpin revenue.
The amount required to fund the housing sector in Nigeria and bridge the estimated 28 million housing deficit across the country is N21tn, the Federal Government has stated through its Bank of Industry.
In a new report on Nigeria’s housing sector put together by BOI, the bank explained that “with a growing urban population, increasing construction costs, and declining household income, access to affordable housing is becoming more difficult for millions of citizens.”
Nigeria’s Gross Domestic Product (GDP) grew by 3.11% (year-on-year) in real terms in the first quarter (Q1) of 2022, showing a sustained positive growth for six consecutive quarters since the recession witnessed in 2020 when negative growth rates were recorded in quarter two and three of 2020.
Further analysis of Julius Berger’s financial statement shows gross profit increased by 25.79 percent to N34.43 billion as at June 2021.
The company is intensifying spending on capital expenditure in conjunction with rapid construction activities as it spent N15.20 billion on the acquisition of property, plant, and equipment (PPE), which is a 165.25 percent surge from 2021’s N5.73 billion.