By Okey Onyenweaku

Things are beginning to be sour for the giant construction company, Julius Berger Plc. The leading Nigerian company offering holistic services covering planning, design, engineering, construction, operation and maintenance of building, infrastructure and industry projects has published its third quarter results that reflect the sad mood in the firm. The result which has just been made public shows that the company posted a loss of -N1.982 billion in the nine months ended September 30, 2020, down from the N5.313billion profit it had recorded in 2019.

Its revenues for the nine months showed a drop of 12.41 per cent to N164.419 billion as against N192.272 billion in 2019. A deeper look at its books, reveal that its overall revenues dropped 12.4 per cent; from N192.271billion in 2019 to N168.418 billion in 2020. Industry experts have hinged the firm’s challenges, most notably on the quantum of its foreign exchange losses, which stood at N3.575 billion.

Whereas the company tried to moderate its cost of sales as it dropped by 7 per cent, and with finance costs also dropping by 70 per cent from (N6 .163billion) in 2019 to (N1.839billion) in 2020, these quite impressive cost management moves, could however not lift the firm beyond the red-line. Operating profit fell by 68 per cent from N13.057billion in 2019 to N4.001 billion in 2020.

In the 3 Months results from June to September 2020, the turnover of Berger, which is clearly one of the biggest construction companies in Nigeria, declined by 60 per cent from N168 billion in 2019 to N66.363 billion in 2020.
Compounding this is the fact that the company also posted a loss of –(N50.5billion) in the 3 months in 2020 while profit before tax stood at N551.173 million from the red region of ­–(N996.4million).

The company’s fiscal health was also not any much better in the half year 2020 showing when it recorded a foreign exchange loss of N3.102 billion which resulted in an after-tax loss of about N1.931 billion in H1, 2020, compared with a profit boost of N2.835 billion in the corresponding period of 2019.

Further details from the company’s unaudited H1 financial report revealed that the construction firm recorded overall revenues of N102.055 billion during the first half of the year, as against N131.783 billion in 2019. Gross profit fell from N29.849 billion to N18.633 billion in 2020.

Still on its cost-cutting outcomes, Julius Berger also recorded a significant decline in administrative expenses to N15.748 billion in 2020, which is less than N22.446 billion in 2019. Overall therefore, the score card of the company has raised doubts that the 2020 end of year account of the company will not be full of red paints.

This is more so when a critical look at the company’s performance in the last five years from 2015 to 2019 shows that its group’s turnover rose 99 per cent from N133.807billion in 2015 to N266.430billion in 2019. Its profit before tax also rose 114 per cent from N6.630billion in 2015 to N13.918billion in 2019.

The company’s five year results also shows that revenues increased by 104 per cent from N119.242billion in 2015 to N243.488 billion in 2019. Its profit also was up 61 per cent from N6.234billion in 2015 to N10.079billion in 2019.
While the company’s earnings per share stood at N5.72, net asset per share closed the year at N30.55.Unfortunately however, shareholders of the company have lost 26.6 per cent of their holding value as its stock price fell from N23.25 per share where it had stood in January 3, 2020 to N17.05 per share by November 5, 2020.

The Berger touch

Julius Berger is a Nigerian construction company, headquartered in Abuja with additional permanent locations in Lagos and Uyo.

Since setting up shop in the country in 1965, Julius Berger has made significant strides in the business of construction and building infrastructure across all the regions of Nigeria.

Also from a point of history, it was the firm’s display of relative efficiency in building the first phase of Eko Bridge back in the day that made it a top choice to repair the bridge over the River Niger which had been damaged during the civil war. This project kept the company very busy in Nigeria and opened the door for others.

Accordingly then, it was its works, especially the building of Eko bridge, the Lagos-Badagry Expressway, the Itoikin-Ikorodu-Epe single carriageway, ring roads and Apapa-Oshodi and Agege Motor Road, among others that helped established its reputation in the country, and most notably also in the Lagos area.

But even beyond the nation’s commercial nerve centre, Julius Berger has constructed many other roads and bridges in the country, of which the ongoing flyover projects in Rivers State, one of which was commissioned at the weekend, are most notable at the moment.
The company was to be formally registered in Nigeria prior to the building of the Jos water works, in 1974. It sold 40% of its equity to Lagos and Benue-Plateau State governments and three years later sold an additional 20% to the public. After the infamous cement armada caused chaos at Apapa port in the mid-1970s, the company was invited to build a new port for the country at Tin Can Island. In the 1970s and early 1980s, it was involved in civil works at the Aladja and Ajaokuta Steel complexes and the new federal capital territory, Abuja.

On account of its solid, qualitative and competitive historical work reputation established over the years, literally every region and state of the country competes to use Julius Berger, most notably for the construction of their roads.

In the 1980’s and 90’s, and even in most parts of the first two decades of the current century, Julius Berger’s sign posts dotted every part of the country, such that it seemed at times like no other construction company exists in the country. In fact, the company’s amorphous presence almost ensured a swallowing up of its competitors. This domineering character also gave it a huge chance in the equities market as it became a strong performer and a ‘must buy’ as part of most investors’ investment portfolios.

The company is represented across Nigeria in structural engineering and infrastructure works, and in southern Nigeria in addition, through domestic and international oil and gas industry projects. It is known for constructing most of Nigeria’s infrastructure, major expressways, and even some residential buildings for the headquarters of some oil companies, including Chevron Nigeria, in Lagos.

Other construction companies in Nigeria include Reynolds Construction Company, Setraco Nigeria Limited, China Civil Engineering Construction Corporation (CCECC), Costain West Africa, Adold Engineering Company Limited, Arab Contractors, Saidi Nigeria Limited, Dantata and Sawoe Construction Nigeria and Brunelli Construction Company.

Of these construction companies, Julius Berger appears to be the most popular and about the largest. And analysts believe that the challenges faced by construction firms include inadequate funding, demands for kickbacks, poor quality control, abandonment of projects, and lack of clarity and depth in regards to maintaining spelt out standards in the original contracts’ specification documents.

The company which was listed on the Nigerian Stock Exchange (NSE) in 1991, employs over 18,000 persons who are drawn from close to 40 nations.

Macro-economic hiccups

However, many are seemingly certain that the overhanging Nigerian economy is presently headed for recession. Despite IMF’s reversal of the 2020 economic growth forecast from -5.4 per cent to -4.6 per cent, the harsh conditions that were there before Covid-19 are still strong and pervasive in the operating environment.

Analysts believe it has become hard for firms to fly in such weak economies as Nigeria where the economy which has already shrunk by -6.1 per cent in the second quarter of 2020 is expected to slide into formal recession; where inflation is hitting the rooftops at about 13 per cent; where the Naira has lost value and vigour; where the budget deficit stands at -4.69% of GDP; where insecurity has halted business activities in some parts of particularly Northern Nigeria; where unemployment remains very high; where government is unstable; and where economic policies are tailored towards favouring a section of the country.

Recently, the government has hiked the price of fuel and electricity for the masses of the country with 82 per cent of its population in the poverty bracket.

”Who would expect companies to perform magic in a country where its citizens appear to have lost hope”, a senior civil servant who would not want to be mentioned in print, queried.

Even at that, in the 2021 proposed budget, about N5.2 billion, a third of the N13.08 trillion is going to be borrowed which will probably increase the nation’s debt stock to about N33trillion.

There is a consensus that many companies may find it difficult to survive well in a country with these worrying statistics and dimensions. And analysts and industry watchers are therefore not surprised by Berger’s current poor run.

”The company, making a loss is not unexpected because it is a construction company and construction activities were seriously depressed during the lockdown and up till now I don’t think that anything construction in the deep sense of the word is still going on now. So it is not unexpected that it will not make a profit. However, for a company like Julius Berger really, you know it is actually supposed to be one of the strongest companies in the country, so apparently it did not diversify beyond construction” says the Managing Director of HighCap Securities Limited, Mr. David Adonri.

Before now, Julius Berger had been very formidable not only in brand equity but also in performance. To survive and thrive, going forward, it may very well be time to take Adonri’s subtly stated advice: diversify.


Perhaps the bad effects of weak economy may linger much longer in the board rooms. There is no end to strategy sections on how to over-come the stifling effect of the recent head and tail winds. For Nestle Nigeria Pls, its managers cannot wait for the ill wind of posting weak results to blow off. Unfortunately, the company has again posted a decline of -13 per cent again in the nine months results to the consternation of its owners.

The company’s profit after tax also plunged -13 per cent while total equity also declined steeply by -26 per cent from N56.5billion in 2019 to N41.811billion in 2020

However, the giant Beverages firm declared an interim dividend which increased by 17 per cent from N30.517billion in 2019 to N35.669billion in 2020, putting a smile on the faces of shareholders.

Poring through the company’s books, revenues rose by 1 per cent from N211.3billion in 2019 to N212.737billion in 2020.

Also in the three months results of the company from July to September, while the company’s revenues rose by 3.26 per cent from N69.438billion in July 2019 to N71,707 billion, cost of sales rose by 8.4 per cent from (N39.206billion) to (N42.520billion) in 2020.

Profit in the three months also dropped marginally from N16.117billion to N15.399 billion.

Sturdy player

To be sure Nestle Nigeria has demonstrated over the years that it is indeed a sturdy player in the Nigerian business arena. With strong household brand leaders like the Milo beverage and the Maggi seasoning, the company has through the years found and occupied regular spots in many a Nigerian household.

This acceptance has also been demonstrated at the Nigerian Stock Exchange where it recently hit the N1,000 per share mark.

Add to this the strength of its global parent brand which continues to provide the Nigerian operation with strong shoulders upon which to rest, then you have a business operation that would require more than the casual occurrence to flinch.

But then these are clearly unusual times in the Nigerian and global business firmament.