Transcorp: Sustaining Profitability Amid Challenges

Kayode Tokede

Transnational Corporation Plc (Transcorp) sustained its growth momentum in nine months ended September 30, 2023 amid the prevailing economic headwinds, including forex challenges, hike in inflation rate, among others.

Publicly quoted conglomerate declared N26.16billion profit before tax in nine months of 2023, representing an increase of 25.4 per cent from N20.87billion reported in nine months of 2022, while profit after tax hits N22.74billion in nine months of 2023, an increase of 19.4 per cent from N19.04billio in nine months of 2022.

The conglomerate with investments in the Power, Hospitality, and Energy sectors recorded N23.77billion profit before tax in its Power subsidiary, contributing about 90.8per cent to overall profit before tax in period under review against 94.4per cent in the corresponding period of 2022.  

The power subsidiaries of Transcorp that include Transcorp Power, Transafam Power are well-positioned to exploit available opportunities for growth.

Transcorp Power holds a significant position as one of Nigeria’s foremost electricity generation companies, and it proudly possesses ownership of the esteemed Ughelli Power Plant.

The group, however, recorded a commendable growth across all its major indices signposted by an impressive revenue of N128 billion in nine months of 2023, a growth of 33 per cent when compared to N96.2 billion in nine months of 2022, while operating income increased to N42.7 billion in nine months of 2023, an increase of grew by 36per cent from N31.5billion reported in nine months of 2022.

The breakdown revealed that its Hospitality subsidiary reported N29.85billion in revenue, an increase of 31.78 per cent from N22.65billion reported in nine months of 2022.

The hospitality business is made up of its direct subsidiary Transcorp Hotels Plc. (THP) and indirect subsidiaries, Transcorp Hotels Calabar Limited (THC), Transcorp Hotels Ikoyi Limited, Transcorp Hotels Port Harcourt Limited and Aura by Transcorp Hotels.

Power subsidiary generated N98.18billion revenue in nine months of 2023, an increase of 33.4 per cent from N73.59billion reported in nine months of 2022, while revenue from Corporate centre of Transcorp generated N10.01billion revenue in nine months of 2023, a growth of 31 per cent from N7.64billion in nine months of 2022.

The 33.4 per cent increase in Power subsidiary of Transcorp is coming on the backdrop of challenges of Gas and infrastructure in the sector, showcasing the group’s innovative and resilient business strategy.

Cost of sales

Cost of sales increased to N63.77billion in nine months of 2023, an increase of 29 per cent from N49.55billion in nine months of 2022, to bring about N64.26 billion gross profit in nine months of 2023 from N46.7 billion reported in nine months of 2022.

The group’s CoS/Revenue dropped to 49.81 per cent in nine months of 2023 from 51.48 per cent in nine months of 2022.

Natural gas and fuel costs contributed N44.52billion to the group’s cost of sales in nine months of 2023 from N35.59billion reported in nine months of 2022.

The group’s administrative and general expenses stood at N23.25billion in nine months of 2023, representing 45.5 per cent increase from N15.98billion in nine months of 2022, coming on the backdrop of double-digit inflation rate and weaken of Naira at the foreign exchange market.

From the profit & loss figures, about N6illion “other operating expenses” in nine months of 2023 from N3.29billion in nine months of 2022 and management and incentive fees of about N3.7billion in nine months of 2023 from N2.06billion in nine months of 2023 were the key drivers of the group’s administrative expenses.

Transcorp’s operating profit closed the period under review at N42.74billion in nine months of 2023, an increase of 35.6per cent from N31.52billion reported in nine months of 2022.

Finance cost hits N19.43billio in nine months of 2023, a growth of 69.2 per cent from N11.49billion in nine months of 2022.

Transcorp’s foreign exchange loss on borrowings stood at N6.1billion in nine months of 2023 from N1.05billion in nine months of 2022 and N13.34billion interest expense on loans in nine months off 2023, an increase of 28 per cent from N10.44billion in nine months of 2022, responsible for 69.2 per cent growth in finance cost.

Finance income, however, closed nine months of 2023 at N2.86billion from N828.97million in nine months of 2022, representing an increase of 245per cent.

In addition, Basic Earning Per Share increased to 36.41kobo in nine months of 2023 from 21.93 kobo in nine months of 2022.

Divestment boosts balance sheets

The groups’ investment in Power, other critical sectors boost the group’s total assets that gained eight per cent from N442.7 billion in 2022 full year to N479.8 billion as of September 30, 2023.

As Non-current assets stood at N352.76billion as of September 30, 2023 from N340.83billion in 2022 FY, current assets hits N127.06billion as of September 30, 2023 from N101.9billion in 2022FY.

Transcorp’s total liabilities gained 4.16 per cent to N299.91billion as of September 30, 2023 from N287.93billion in 2022.

Consequently, total liabilities contributed 62.5per cent to total assets in nine months of 2023 from 65.04per cent in 2022. 

Current liabilities was at N204.97billion as of September 30, 2023 from N200.15billion in 2022, as non-current liabilities stood at N94.94billion as of September 30, 2023 from N87.78billion in 2022FY.

In addition, Transcorp closed nine months with N179.92billion, representing an increase of 16.2 per cent from N154.77billion reported in nine months of 2022. 

Management’s Optimism

The group’s stock has appreciated by 450.44 per cent Year-till-Date to N6.22 per share as of September 27, 2023 from N1.13 per share it opened for trading in 2023.

The President/Group Chief Executive Officer, Transcorp, Dr. (Mrs) Owen Omogiafo, expressed enthusiasm and confidence in the Group’s performance trajectory.

According to her, “Our Group, with our diverse investment in power, hospitality, and energy sectors has reported remarkable results, demonstrating resilience and agility in the third quarter of 2023 amidst the prevailing economic headwinds, including forex challenges, Naira devaluation, gas challenges, and rising inflation.”

“We remain agile, constantly exploring dynamic ways to maintain value for all our stakeholders, and focused on driving sustainable growth, improving lives, and transforming Africa.” asserted Omogiafo.

Transnational Corporation Plc (Transcorp Group) is a publicly quoted Conglomerate with a shareholder base of approximately 300,000.

The Group’s diverse portfolio comprises strategic investments in the Power, Hospitality, and Energy sectors. Among its notable businesses are Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power, Transafam Power, and Transcorp Energy.