Company Overview
RTBRISCOE
was incorporated
as a private company on March 9, 1957. It went public in 1973 and was quoted on
the Nigerian Stock Exchange (NSE) in March 15, 1974. It is
principally engaged in the sale and service of Toyota and Ford motor vehicles,
forklifts, industrial compressors, mining and drilling equipment and generating
sets. Its subsidiary, Briscoe Properties Limited, deals in facility management, property
development and property leasing while
CAWS Technical Nigeria Limited sells industrial equipment.
Mr.
Clement Adekunle Olowokande is the chairman of an eight-man board comprising
seven non-executive directors and one executive director. Mr. Bukola Oluseyi Onajide is the managing director.
Investment Thesis
The sale of motor
vehicles and industrial equipment slowed. This is a cause for concern because
it is the major contributor to earnings.
The company also makes money from the servicing and maintenance of Ford
and Toyota motor vehicles. However, the company has recently lost its Ford
dealership. This will no doubt impact earnings negatively as motor vehicles
account for about 80% of its turnover.
Property
development and motor vehicle servicing both have a gross profit margin of 30%,
the highest for the business. However their joint contribution to total revenue
is about 10%. Management should aggressively grow the non-auto business, having
lost its Ford distributorship in Nigeria. But this may be difficult in the
short-run owing to declining purchasing power of consumers caused by the
meltdown in the country.
RTBRISCOE is debt-laden and increasing
debt servicing cost has made it difficult for the company to make profit. A total of NGN9.3 billion was outstanding at
the end of September, 2016 compared to NGN11.1 billion recorded at December,
2015. Short-term debts accounts for over half of total indebtedness . Unless
the company can restructure the loans, it may face an uphill task meeting its
maturing short-term obligations. Also, better working capital management will
reduce untoward pressure on profitability and solvency. This is particularly
important now.
Returns
have not been encouraging because the company has been making losses after tax
since 2012. And shareholders are not adequately compensated for their
investment in the company.
Management
plans to restore profitability by pruning the business of unprofitable
segments, running down inventories and restructuring some of its debts. However, we will continue to keep in touch to
see how management turns around this ailing company.
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