COVID-19 isn’t finished with Chemical and Allied Products (CAP), as the company continues to lose money due to the pandemic, which disrupted the global business environment for almost the entire year of 2020.
CAP increased its revenue by 202 percent in the second quarter of this year, earning N3.54 billion, compared to N1.17 billion in the same quarter last year.
Its profit was also on the rise, with an increase of 110 percent. The paint maker’s gross profit for Q2 2021 was capped at N1.03 billion, compared to N493 million for the same period in 2020, according to the company’s financials.
Between April and June (Q2), CAP’s operating profit increased to N350.9 million, surpassing the N168.58 million reported during the same period the previous year.
During the three months under review, however, the profit margin was held in check by the cost of production and operating expenses.
According to reports, the cost of sales increased by 268.1 percent in Q2 2021, to N2.51 billion, far exceeding the N682.83 million spent on production in Q2 last year [note that operations in Nigeria were partially halted due to COVID-19].
In addition, after rising by 158.5 percent in Q2 2021, operating expenses lowered the profit margin. Operating expenses for the period under review were N879 million, exceeding the N340 million reported for Q2 2020, according to CAP financials.
The high cost of materials and other services required for the continued operation of CAP had an impact on the increase in cost of sales and operating expenses.
The Managing Director, David Wright, commented on the impact of the COVID-19 pandemic on CAP’s earnings, saying, “the impact of the COVID-19 pandemic on our business, which resulted in a global shortage of raw materials and a significant increase in input costs, continues to affect profitability margins.”