How ABC Transport Loses Nearly Every Kobo It Makes

ABC transport is a company involved in the transportation sub sector. The company is famous among everyday Nigerians for their luxury buses and shuttle services across the nation. The company has a chequered record in terms of profits, recording losses in 2016, and barely making a profit in HY 2017.
Where does the company makes money from them?

Data from the annual report for the period ended December 2016 revealed the company posted total revenues of N6.7 billlon, yet made a loss after tax of N490 million. Key topline drivers were income from its coach services, cargo, haulage and sales of truck spare parts.

Bottom line tells a different story as the company made losses in virtually all its segments except for cargo, sprinter and hospitality segments. Revenue from cargo came in at N1.17 billion, while expenses were N1.10 billion, giving a profit before tax of N67 million.

Sprinter revenue was N497 million while expenses came to N447 million, giving a profit before tax of N49 million.

Total income for the hospitality segment was N260 million while total expenses under this segment was N159 million giving a profit before tax of N64.1 million, showing the company made its biggest profit margin from here.

The trend continued in its HY 2017 results as cargo services and the hospitality segment made the biggest profit margins. CTI the hospitality segment made a profit before tax of N45 million on revenues of N129 million. Cargo services had total revenue of N646 million, expenses of N623 million giving a profit before tax of N28.4 million.

Why other segments are struggling

Transportation business usually has slim profit margins, and operating in a difficult business environment like Nigeria makes it even worse. Bad roads increase the wear and tear on the vehicles, while insecurity limits the number of trips a bus can make in a day.

The company is also faced with multiple taxation across the three tiers of government. Depreciation of the Naira could also have had a negative effect as spares and parts would become more expensive.

ABC Transport was incorporated in April 1993, but became a public company in 2005. The company is into road passenger transportation, cargo business, haulage and hospitality services. ABC shares closed flat in today’s session on the NSE.
Source:Nairametrics.com