The management of construction giant- Julius Berger Nigeria, announced on Thursday to diversify to agro processing business
This was sequel to the the approval by its board at a meeting on September 22, 2020, for the diversification as tabled by its management.
A statement to the Nigerian Stock Exchange (NSE), by Mrs. Mrs. Cecilia Madueke, the company secretary, expressed the strong belief of its board and executive management “that this diversification direction would support the continued success of the group in the future and align with the strategic objective of the government to stipulate value creation in Nigeria.”
This is the second diversification move in recent times, and follows last year’s acquisition of 20% equity stake in Petralon 54 Limited (P54L), a wholly owned subsidiary of Petralon Energy Limited (PEL), through Julius Berger Investments Limited (JBIL), a wholly owned subsidiary of Julius Berger.
The initial strategic partnership related to the development of oil fields in Nigeria, and “in line with the strategic goals of Julius Berger on diversification,” enabling it to acquire know-how and experience in the Oil and Gas Sector.
The need to broaden its revenue away from the construction industry may not be unconnected with the unfriendly business environment in recent times, which for example, resulted in the company slipping into a N2.398bn loss in 2016. In 2017, Julius Berger returned to profit, netting N2.572bn. PAT soared to N6.101bn in 2018, before growing by 43.56% to N8.759bn last year.
Despite this growth and keen on the diversification project, the directors voted to cut dividend offer from N2.75 per share to N2.00 in a bid to conserve funds, given the global and domestic economic outlook arising from the ravaging Coronavirus pandemic that has resulted in a lockdown of the economy just like others across the globe.
In an advisory to the Nigerian Stock Exchange (NSE) announced by Mrs. Madueke, the directors said the times require “a rethink of spending plans by corporate boards to protect liquidity and ensure long-term sustainability, while balancing the needs for return to shareholders.”
In Instead, the board offered a bonus of one new share for every existing five held, in what it said is the outcome of careful consideration of “the emerging social, operational, financial and economic impact of the COVID 19 pandemic, the outlook for Nigeria for the Financial year 2020 and the impact on the business and cash flows of the group.”