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JULIUS BERGER PLC PLC 9M'19 Earnings - Continues its year of renaissance

Continues to report impressive earnings

JBERGER recently released its 9M’19 results, reporting a 56% y/y improvement in PAT to ₦5.3 billion, ahead of our ₦5.0 billion estimate. While most line items came in flat versus expectations, the earnings beat was driven by smaller than expected operating expenses. Overall, the construction giant continued to report solid earnings in 2019, continuing its recovery from a less than inspiring 2018 performance.

 

Topline and operations continue to flatter

JBERGER reported a topline of ₦60.5 billion in the 3M period, 33% higher y/y, albeit 1% below our expectation. Notably, the strong topline performance was driven by increased revenue from both the public and private sectors in Nigeria, with the public sector contributing the bulk of topline (c.79%). Overall, 9M’19 topline grew 62% y/y to ₦192.3 billion, flat against our ₦193.0 billion expectation. Meanwhile, while gross margin fell by 310bps y/y to 19% in Q3, EBIT margin expanded by 390bps y/y to 8% (Vetiva: 8%), following a lower than expected operating expense line. In absolute terms, JBERGER reported a 158% y/y jump in EBIT to ₦4.9 billion (Vetiva: 4.8 billion), taking 9M’19 EBIT 47% higher y/y to ₦12.5 billion (Vetiva: ₦12.5 billion). With the FG still accounting for a large portion of topline, JBERGER continues to rely heavily on short term financing, with the company reporting a 49% y/y jump in Net financing costs to ₦5.0 billion in 9M’19 (Vetiva: ₦5.0 billion). After accounting for a 9M’19 tax expense of ₦2.2 billion (Vetiva: ₦2.6 billion), PAT came in at ₦5.3 billion.