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John Holt Nigeria Plc has incurred N1.28 billion in foreign exchange losses on the back of currency devaluation as weak consumer demand led to a sharp reduction in sales.
The foreign exchange led to a loss after tax or net loss of N1 billion as at the year ended September 2023, from a profit of N72 million as at September 2022.
A weak Naira has been a drain in the bottom line of the company with interest in businesses ranging from engineering, leasing, trade and distribution, and there are concerns that a tepidly unimpressive performance fuels a consistent investor apathy towards the company’s stocks.
The unification of the foreign exchange rate to spur foreign investment resulted in the Naira losing significant value that compounded the woes of households and firms.
The conglomerate saw sales dip by 48.45 percent to N1.83 billion in September 2023 from N3.55 billion the previous year.
While the company is reeling from deteriorating profit margin due to economic downturn, it has strong short term liquidity that means it can meet its immediate obligations to suppliers and sundry creditors.
Current ratio stood at 2.23 in September 2023, according to MoneyCentral calculations.
The current ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year. It tells investors and analysts how a company can maximize the current assets on its balance sheet to satisfy its current debt and other payables.
In many cases, a company with a current ratio of less than 1.00 does not have the capital on hand to meet its short-term obligations if they were all due at once, while a current ratio greater than 1.00 indicates that the company has the financial resources to remain solvent in the short term.
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