Poor Earnings: Investors Price Caverton Down by 14%
Following a rather too poor earnings performance in the third quarter, Caverton Offshore Support Group Plc’s share price went down by about 14% in a bullish market due to weak buying interest in the group that provides an offshore support service.
Traded at N1.33 at the closing session in the stock market on Friday, the company’s market valuation bumped to N4.456 billion, with a 21.77% free float which is compliant with a requirement from the Nigerian Exchange.
MarketForces Africa’s review showed that as of the end of nine months of its financial year 2023, three majority shareholders control 73.76% of the company’s 3.350 billion outstanding shares.
A review of financial results for the third quarter indicates that Caverton is facing earnings pressures. Its earnings per share slumped to 1 kobo, down by 88.89% over 12 months from 9 kobo in the previous year.
Revenue inched higher by 10% year on year to N24.24 billion in nine months of financial year 2023, from N22.041 billion in the comparable period. The surge was nullified by a similar level of growth in its operating costs profile, up by about 10% from N15.528 billion to N17.029 billion.
Further detail from its unaudited result revealed that the group made N46.1 million as profit at the end of nine months, which represents a steep decline of about 85% from N302. 095 million it reported in the equivalent period in 2022.
While the group operating profit grew moderately in the period, operating expenses accelerated amidst worsening inflation conditions in Nigeria. Its unaudited result showed that operating profit grew by 10.71% to N7.21 billion at the end of the nine months of 2023, from N6.513 billion in the comparable period in 2022.
Administrative expenses remained the pressure cooker for the offshore services company despite record FX gains from foreign currency asset holdings. Caverton administrative expenses surged by almost 100% to N6.545 billion from N3.273 billion 12 months ago.
The company recorded a surge in FX gain to about N786 million from N38 million in the previous year. A steep reduction in the company’s net finance costs failed to save the day. Also, Caverton recorded more than N14 million loss from investment in an associate, upturning more than N246 million share of profit obtained in the same company in the equivalent period last year.
Commenting on the results, Caverton’s Chief Executive Officer, Mr. Bode Makanjuola stated that this period has been marked by significant challenges, resulting from the removal of fuel subsidy and a substantial depreciation of the Naira against the dollar.
“As a result, we have experienced a significant increase in operating expenses that has impacted our financial performance”, its CEO said.
Shareholdings
Tasmania Investment Limited maintains its largest single shareholding at 54.03% while Mola Vessels Limited controls 7.49% coming behind Chairman of the Board of Caverton Offshore Support Group Aderemi Makanjuola’s 12.24%. #Poor Earnings: Investors Place Lower Value on Caverton Naira Devaluation Deepens Economic Crisis in Nigeria
