Greif Nigeria Plc, the manufacturer and marketer of steel drums has surmounted the difficult environment as its multiple price increases on products underpinned sales.
For the period ended October 31 2016, the company’s sales increased by 24.09 percent to N999.15 million from N805.37 million as at December 2015.
The strong growth at the top lines translated into bottom line impressive performance as net income was up 10.07 percent to N27.10 million as against N24.62 million the previous year.
“We, however, navigated the difficult business terrain by recovering our costs through multiple price increases to our customer, pragmatic cost reduction initiatives and improved efficiencies,” said Louis Wentzel, the chairman of the company.
“In addition, we retained business focus by strict adherence to the discipline of the Greif business system and customer service excellence, running a lean production system with increased emphasis on continuous line improvement and waste elimination,” said Wentzel.
Wentzel said the global steel demand surged in themarket place as a result of improved economy in the China economy and that the increased demand caused a severe scarcity that balloon the cost of raw materials.
Grief’s cost of sales increased by 40.08 percent to N833 million while cost of sales ratio moved to 83.25 percent in the period under review as against 80.15 percent the previous year.
Experts say the company’s stellar pe4rformace amid a tough and unpredictable macro environment is commendable.
A sharp drop in the price of oil since mid-2014 caused a severe dollar shortage that saw the country slip into its worst recession in 25 years.
In order to stabilize the economy, the central bank the central bank pegged currency at N197-N1999 for 15 months while banning 41 items from its official window.
The policy boomeranged as dollar scarcity heightened and manufacturers were forced to source dollars at the inaccessible black market. Companies resulted in huge layoffs while scaling back on expansion plans to stay afloat.
The naira has remained relatively calm at N305/$ at the interbank market while it exchanges for N500 at the parallel market.
Grief and other player in the steel industry have been given a life line because government plans to spend about $7 billion to revive an industry in moribund and diversify the economy.
Nigeria has an annual steel demand of 6.8 million metric tons, according to Solid Minerals Development Minister Kayode Fayemi said.
Nigeria’s present steel production stands at about 300,000 tonnes per annum, while consumption is above 20 million tonnes per annum.
Grief however utilized the owner’s resources in generating higher profit.
The company’s return on equity (ROE) increased to 8.02 percent in 2016 from 7.10 percent the previous year.