Chemical and Allied Products Plc has reported a 42 per cent decline in profit after tax for the second quarter of 2024.

The company’s post-tax profit fell from N895m in Q2 2023 to N517m in Q2 2024, driven by escalating raw material costs and shrinking margins and pre-tax profit dropped by 42 per cent from N1.3bn in 2023 to N772m in Q2 2024.

This was disclosed in the company’s unaudited financial results for the period ended June 30, 2024, which filed with the Nigeria Exchange Limited on Wednesday.

Revenue rose 22 per cent to N7.1bn compared to N5.8bn in the second quarter of the previous year.

The gross profit increased by 11 per cent to N2.5bn from N2.3bn in Q2 2023, reflecting a contraction in the gross margin by 3.8 percentage points, from 39 per cent to 35 per cent, due to higher raw material and conversion costs.

Also, the operating profit took a hit, decreasing by 33 per cent to N569m from N848m in the previous year.

The operating margin also contracted by 6.6 percentage points to 8 per cent, influenced by inflationary pressures on the cost of services.

It was reported that the operating expenses rose by 37 per cent, from N1.5bn to N2.0bn, driven by a 27 per cent increase in selling and marketing expenses as well as a 43 per cent rise in administrative expenses.

Despite a 48 per cent increase in other operating income to N92m from N62m, net finance income dropped by 58 per cent to N203m from N488m, exacerbating the overall decline in profitability.

Also, finance income fell by 64 per cent from N578m to N209m, while finance costs were reduced by 94 per cent from N91m to N6m.

The earnings per share decreased by 42 per cent to 63 kobo in Q2 2024 from N1.09 in the same period of 2023.

For the first half of 2024, the company’s revenue, increased by 60 per cent to N15.6bn compared to N9.8bn in the first half of 2023.

Gross profit was 53 per cent higher at N5.6bn, but the gross margin slightly contracted by 1.6 percentage points to 36 per cent.

Operating profit also increased by 32 per cent to N1.6bn, while profit before tax for the first half of the year rose by 40 per cent to N2.7bn from N1.9bn in 2023.

During this period, the earnings per share increased by 40 per cent to 220 kobo from 157 kobo in H1 2023.

Commenting on the results, the Managing Director of Chemical and Allied Products Plc, Bolarin Okunowo, stated that the macroeconomic conditions would be challenging in the second half of the year.

He noted that the company would be concentrating on striking a balance between satisfying its customers, maintaining its margins through operational optimisation, and achieving growth in line with its strategy.

“Our performance in Q2 2024 reflects both our strategic growth initiatives as well as the difficult operating conditions. We achieved strong revenue growth of 22 per cent, supported by volume growth across all product categories.

“However, profitability was impacted by broader inflationary pressures. Looking ahead, we anticipate that macroeconomic conditions will remain challenging in the second half of the year and we will focus on balancing delivering growth in line with our strategy, protecting our margins by optimising our operations and delighting our customers,” he said.