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Tuesday, March 21, 2023

Julius Berger Profits Slide as Construction Activities Wane

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Julius Berger Nigeria Plc suffered a sharp fall in profit due to a decline in construction activities since March last year as many builders halted work and cut jobs while the coronavirus hit the economy.

As measures to contain the coronavirus Covid-19 pandemic were put in place across the country, construction sites shuttered and builders lost their jobs on a frightening scale as overall activities fell to an extent not seen before.

Julius Berger, the largest construction company by market value in Africa’s largest economy bore the brunt of the headwinds as net income dipped by 40.68 percent to N5.19 billion as at December 2020 from N8.75 billion as at December 2019.

Revenue dipped by 9.0 percent to N242.45 billion as at December 2020, the first drop at the top line in seven years, according to data gathered by MoneyCentral.

The company has been struggling with dollar weakness brought by the central bank’s monetary policy put in place to ward off the impact of the sudden drop in crude oil price on the external reserves.

Julius Berger incurred a foreign exchange loss of N4.22 billion, but it is not burdened by debt.

It has a negative cash flow from operating activities of N7.23 billion as at December 2020, which is 84.66 percent lower than 2019’s N47.14 billion, according to data seen by MoneyCentral.

While the construction giant is beleaguered at the operational level, it has enough operating income to meet obligatory interest expense.

For instance, Operating income of N11.51 billion is 2.73 times interest expense, according to MoneyCentral calculations.

Pressured by coronavirus pandemic induced collapse in crude oil price, Nigeria slipped into its second recession in five years in 2020.

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