By Peter Egwuatu
TRANSNATIONAL Corporation of Nigeria, Transcorp Plc has expressed confidence of improved earnings for the future. The President of Transcorp Plc, Mr. Emmanuel Nnorom, disclosed to news men over the weekend in Lagos that the company’s expansion strategy has started yielding fruits as the Federal Government’s intervention in recent time on Foreign Exchange, forex continues to impact on the operations of the company.
Analysing the constraints that impacted its business in the year 2016, he said “Devaluation impact affected cost of debt service, gas costs and unrealised losses for foreign currency loan that we took. (2015:N18.7billion and 2014:N6.06 billion).There was loss of generation due to gas outages following pipeline vandalisation. Utilisation of available capacity dropped to 55 per cent from 65 per cent in 2015. Generated power dropped from 280MWH from 471MWH. Another problem we had was continued delay in collections with outstanding currently at N48billion. Attendant impact on working capital and finance cost.”
According to him “We are likely to see improved earnings in 2017 as forex problem continues to be addressed and also improved supply of gas as we have experienced since February this year. We have not heard of pipeline vandalisation for some time now and we hope it will be sustained given the commitment of the federal government to develop the Niger Delta region. Stability in the Niger Delta might aid moderate crude oil production to defend the naira. Foreign borrowing to shore up reserves may address forex liquidity.”
Nnorom disclosed that the Board of Directors of Transcorp Hotel has recommended 40kobo per share dividend to be distributed to the shareholders if approved at the next Annual General Meeting (AGM) in March, 2017. Commenting on the company’s performance for the 2016 financial year, he said “Gross revenue increased by 46 per cent largely due to increased electricity tariffs for Transcorp Power in February 2016 and upward review of room rates .
Cost of sales (“COS”) increased by 78 per cent Year on Year, YoY largely due to increased gas tariffs in February 2016. In addition, inflation impact on input cost affected cost of sales in the Transcorp Hotels. Administrative expense increased slightly by 8 per cent due to inflationary pressure in various cost items.
“Our net finance cost increased by 127 per cent YoY due to unrealised exchange loss of N18.70billion reported on USD loan following devaluation of Naira against USD. Exchange rate closed at N304.5/$1 in 2016 compared to N196/1$ in 2015. This affected our our earnings as we recorded profit/loss after tax of N -1,127 billion in 2016, from N2,032 billion in 2015, representing -155 per cent decline .